Research On Budget Management In Enterprise Based On Activity-Based Costing

Budget management is a major method of internal control in enterprise. It played a crucial role during the development of modern business. Budget management is applied widely in the enterprises in the West. In China, more and more companies implement budget management actively.With the social development and economic progress, the enterprise's internal and external business environment has undergone tremendous changes; the disadvantages of traditional budget based on the number have emerged. Budget management base on Activity-Based Costing becomes an inevitable trend. Activity-based budget can not only help businesses achieve tactic, but also help the staff have a better understanding of activities or processes. It can combine staff performance with budget performance management system.This paper is a research on the theory and application of Activity-Based Budgeting on the basis of domestic and foreign scholar's research results. It summarizes the definition and background of ABB, presents four principles about the application of ABB. Based on the above analysis, in order to reflect the superiority of activity-based budget fully, the paper expounds operating principles and methods of ABB, covering budget objective, budget process, budget adjustment and budget control, sums up four indexes of activity-based budget for performance, establishes a difference analysis model. This paper explains how to use ABB to let budget management consist with target of enterprise, in perspective of "activity", "driver" and "value chain".Finally, this paper presents the actual business performance improvement at Automation and protection department in Xu Ji Electric, which has applied activity-based budget.