ABC is also a great tool to use in conjunction with master-budgeting when setting performance targets. Budgeting involves dividing costs up into different categories, such as overhead, labor, and materials. ABC and master budgeting techniques can be used to accurately estimate costs while also providing a framework for tracking progress.
By combining master budgeting with activity-based costs, businesses can optimize both their financial and operational operations. This information allows managers to make informed decisions about resource allocation and pricing.