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

what is zero based budgeting?



Zero based budgeting is approach to budgeting in which budgeting process is done as if the company starts its operations on the year of budgeting. It require activities to be evaluated each time a budget is produced. Each functional budget is prepared on the basis that each cost element is justified as though the activities were occurring for the first time. No item of expenditure is included in the budget without full prior evaluation and justification.
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5 advantages of zero-based budgeting over traditional budgeting.

Revision variance - meaning

Zero-based budgeting is an approach to budgeting in which budgeting process is done as if the company starts its operations on the year of budgeting.
It requires activities to be evaluated each time a budget is produced. Each functional budget is prepared on the basis that each cost element is justified as though the activities were occurring for the first time. No item of expenditure is included in the budget without full prior evaluation and justification. 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