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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › ZBB and incremental budgeting
sir there is a past paper question that : explain the terms incremental budgeting and zero based budgeting.. For 4 marks
Sir, if we exactly write the below both definitions so it correct for 4 marks?
In incremental budgeting the approach is to take the previous year’s results and then to adjust them by an amount to cover inflation and any other known changes.
In zero-based budgeting the previous period is not considered. Instead, each activity on its own merits is considered and cost and benefits of the different ways of performing it (and indeed whether or not the activity should continue) is drawn up. Then the most effective way of performing each activity is decided.Clearly any changes to the way an activity is performed may require funding, and there may not be sufficient funding available for all changes proposed, and therefore they are ranked to decide which changes are made
Yes – what you have written is perfect for the marks 🙂