Activity Based Costing And Information Engineering: Formulation Of An Annual Mine Budget

Budgets are key financial and behavior drivers for most businesses, including mining. Budgets are used to link strategic objectives to tactical decisions, to measure performance, and to provide basic financial planning. More accurate and pertinent budgets should result in improved strategic decision making and performance measures. This paper discusses how a process based production and cost database, based on activity based costing models and the one year production plan, can be used to create the annual budget for an operating mine as an Activity Based Budget (ABB). A case study is used to compare budgets derived from traditional methods and an ABB approach. It is evident that the ABB method is more accurate.