Page 163 - P1 Integrated Workbook STUDENT 2018

Budgeting

3.2 Zero Based Budgeting (ZBB)

Start from scratch each year.

All activities and costs must be justified each year.

 Improved accuracy  Expensive

 Improved utilisation  Difficult

 Justified changes  Time consuming

 Better recognition of environmental  Encourages short-termism
changes
 Requires training
 Improved performance measures

 Best suited to changing
environments

Illustrations and further practice

Now try illustration 2 from Chapter 11.

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