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