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This post explains incremental, zero, and activity budgeting

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1. Explain differences between incremental budgeting and Zero Based Budgeting.
2. Explain Activity Based Budgeting.

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Solution Summary

The solution provides a detailed description of incremental budgeting and zero based budgeting by examining the differences between the two budgeting systems. Activity based budgeting is also explained.

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1. In zero-based budgeting, management starts with a base of zero every time a new zero-based budget is prepared. Historical trends and other considerations are not used for the zero-based budget. In order for an activity to be added onto the budget, a full cost-benefit analysis is prepared, and if the benefits outweigh the costs, the activity is considered justifiable and is added to the ...

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