The major advantage of zero-based budgeting (ZBB) is that it forces managers to evaluate and justify every expenditure from scratch, encouraging them to consider alternative, more efficient ways of achieving objectives.
* Enhanced Resource Allocation:
* Ensures funding is allocated to activities that align with organizational goals and deliver value.
* Cost Control:
* Prevents automatic continuation of funding for existing programs, eliminating waste.
* Innovation:
* Encourages managers to explore alternative methods and technologies for achieving objectives.
* B: ZBB does not automatically fund existing programs; all expenditures must be justified.
* C: ZBB requires justification for all budget items, not just new ones.
* D: Programs operating at a loss are not automatically eliminated without review and justification.
Key Benefits of Zero-Based Budgeting:Why Other Options Are Incorrect:ASIS CPP References:
* Domain 9: Business Principles and PracticesExplains budgeting techniques, including the advantages and challenges of ZBB.