Answer (D) is correct . Activity-based budgeting applies activity-based costing principles to budgeting. It focuses on the numerous activities necessary to produce and market goods and services and requires analysis of cost drivers. Activity-based budgeting cannot reduce the level of uncertainty to which any large organization is subject.
Answer (A) is incorrect because Better identification of resource needs is an advantage of any kind of budgeting.
Answer (B) is incorrect because Linking costs to outputs is a feature of a cost accumulation system, such as job-order or process costing.
Answer (C) is incorrect because Identification of budgetary slack can be built into any budget system, not just an activity-based one.
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