Final answer:
Cost-based budgeting focuses on the budgeted cost of activities required to produce and sell products and services, including fixed and variable costs, to ensure profitability. The given statement is true.
Step-by-step explanation:
Cost-based budgeting is indeed a budgeting method that focuses on the budgeted cost of the activities necessary to produce and sell products and services. This approach involves calculating all the costs associated with the production and sale of a company's products or services, including both fixed costs and variable costs. Fixed costs, such as rent, do not change with the level of production, while variable costs fluctuate based on the level of production output.
It's important for a business to monitor these costs to ensure they are in line with the generated revenue, which is a function of the demand for the firm's products, allowing the company to be profitable and maintain a healthy financial state.