Traditional budgeting methods look at historical data and current resources and then project
forward. Activity-based budgeting is different in that
I. It looks at desired outcomes and works back from there to determine resources
II. It uses current levels of activity to determine future levels without regard to
resources currently available.
III. Being under budget in one year would not necessarily indicate that an operating
unit would have its budget cut the following year.
IV. The focus is on planning department by department based on resources available.