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Advantage and Disadvantages of Zero Based Budgeting
Advantages
1. Resources allocation is more efficient.
2. Focus attention on values for money and makes clear relationship between output and input.
3. Develops a questioning altitude and makes it easier to identify obsolete as well as inefficient and less cost effective operations.
4. Leads to greater management and staff knowledge of operations.
Disadvantages
1. Time consuming.
2. High skills essential.
3. May encourage wrong impression that every decisions must be made via budgets.
4. Short- term benefits may be emphasized to the detriment of long-term benefits.
Year Ending April 2009, 2009 April 30, 2008 Net Sales $10,148,082 $10,070,778 Accs Receivable 1,171,797 1,161,481 Assume that the accounts receivable (in thousands) were $996,852 a
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