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sir,do I need to learn the steps involved preparing this two budgets?? Can you pls expalin a bit sir cause I don’t want to look at bpp before exam day!! help me sir 🙁
Incremental budgeted is taking last years actual figures and adjusting them for expected inflation and expected changes in the level of activity. However, it assumes we carry on doing this the same way (for instance, if we make desks and have always made them by hand, it assumes we continue to make them by hand).
Zero based budgeting looks first at how we do things. For example, we make desks by hand but there is now a machine available and we could make them by machine. So we first cost out the two alternatives (make by hand or make by machine), then we decide which is best of the two, and then we prepare the budgets based on what we have decided to do.
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