Asked by pamela saenz on Jun 07, 2024
Verified
Zero-based budgeting is too introspective. Discuss this statement.
Zero-based Budgeting
A budgeting method that starts from a "zero base" every period, requiring all expenses to be justified for each new period, as opposed to being carried forward.
- Comprehend the theory and objectives behind the implementation of zero-based budgeting.
Verified Answer
KK
Kenzie KimesJun 10, 2024
Final Answer :
When managers focus on their own part of the business, they can overlook the interactions with other departments and the relevance of their operations to overall business objectives and strategies. Thus, zero-base budgeting may not be very useful in helping businesses to manage costs or improve their performance. It has also been claimed that it does not help in identifying areas of waste, redundant activities, communication barriers or opportunities for more effectively deploying resources to support business needs. In the modern business environment, there are more sophisticated techniques, such as value analysis, that allow businesses to consider the viability of activities in terms of whether they add value to the customer and, therefore, to the business.
Learning Objectives
- Comprehend the theory and objectives behind the implementation of zero-based budgeting.