5 disadvantages of zero-based budgeting

5 disadvantages of zero-based budgeting

Zero-based budgeting emerged in the late 1960s as a response to incremental budgeting. With zero-based budgeting, all budgets start at zero and activities/costs are only allowed if they are justified under investigation. All requests for resources must be presented and evaluated on the basis of cost-benefit. Zero-based budgeting is best suited to discretionary spending where there is no clearly defined input-output relationship such as in marketing, research and development, and training or public sector organization such as district councils. read more

5 stages involved in zero based budgeting system.

need of human resource accounting

The zero-based budgeting system is a budgeting system that require every item of expenditure to be justified as if a particular activity or program is taking off the first time.

The following are stages involved in zero-based budgeting systems:

Identification of decision unit/tasks and formulating operational plans read more

Management accounting revision question on zero based budgeting based on ACCA & DRURY

Management accounting revision question on zero based budgeting based on ACCA & DRURY

You are the management account of group of companies and your managing director has asked you to explore the possibilities of introducing a zero based system experimentally in one of the operating companies in place of its existing orthodox system.
REQUIRED:

    1. Explain how zero-base budgeting would work within the company chosen
    2. What advantages it might offer over the existing system?
    3. What problems might be faced in introducing a zero-base budgeting scheme?
    4. The future you would look for in selecting the operating company for the introduction in order to obtain the most beneficial result from the experiment.
    5. read more