Advanced Prepare brief notes about zero-base budgeting covering the following topics: (a) what zero-base budgeting means; (b)
Question:
Advanced Prepare brief notes about zero-base budgeting covering the following topics:
(a) what zero-base budgeting means;
(b) how zero-base budgeting would operate;
(c) what problems might be met in introducing zero-base budgeting;
(d) what special advantages could be expected from zero-base budgeting, as compared with more traditional budgeting methods, for an organization operating in an economic reces¬ sion. (20 marks)
CIMA P3 Management Accounting 15.7* Advanced
(a) ‘... corporate planning and budgeting are complementary, rather than the former super¬ seding the latter.’
Compare the aims and main features of ‘corporate planning’ and ‘budgeting’ systems.
(12 marks)
(b) The aims of zero-base budgeting have been described recently in the following terms: ‘Zero-base budgeting is a general manage¬ ment tool that can provide a systematic way to evaluate all operations and programmes; a means of establishing a working structure to recognise priorities and performance measures for current and future plans; in essence, a methodology for the continual redirection of resources into the highest prior¬ ity programmes, and to explicitly identify tradeoffs among long-term growth, current operations, and profit needs.’
Explain how a system of zero-base budget¬ ing works, and to assess its likely success in attaining the aims set out above.
Step by Step Answer: