This paper identifies a number of differences in the treatment of costs and expenditures in activitybased costing (ABC) and a management accounting system based on the managerial economics model.At present, ex ante ABC models incorporating a resource consumption model and a resource spending model with what-if capabilities are recommended for activity-based budgeting in order to make betterinformed strategic and operational decisions. Using a numerical example, the paper demonstrates the resulting cost distortions in ex ante ABC models and their profitability segments when costs are nonlinear and in situations where opportunity costs are relevant. The paper also shows how these distortions can be avoided in a budget layout based on managerial economics
Global solutions of a doubly tactic resource consumption model with logistic source
