Page 162 - P1 Integrated Workbook STUDENT 2018
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Chapter 9
Alternative approaches to budgeting
3.1 Incremental budgeting
Adjust the previous years’ budget for inflation and cost increases.
In addition there may be other adjustments for specific items such as an extra worker
or extra machine.
Easy Ignores environmental changes
Cheap Builds on inefficiencies
Suitable in stable environments Too easy
Unjustified changes
Encourages over-spending
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