Zero-base budgeting , Managerial Accounting

Zero-Base Budgeting

Zero-Base Budgeting (ZBB) was first developed and introduced for business by Peter A. Pyhrr. From this starting ZBB has been explored and adopted by many other businesses. The principle behind ZBB is that each cost centre budget should be made from ‘scratch’ (a zero base). It starts from the basic assumption that the budget for the next year is zero and every process/expenditure must then be justified fully in order to be included in next year’s budget. ZBB is useful for discretionary costs. In ZBB there should be a positive attempt to eliminate inefficiency and slacks from current operations.

The development and implementation of the ZBB model requires managers and others in the organization to engage in several main preparations, analytic and decision-making procedures. These major processes of ZBB include the following:

  • Stating the mission and aims of the organization
  • Recognition of the Organization's Decision Units and Decision Packages
  • Analysis of Each Decision Package
  • Ranking of Decision Packages
  • Acceptance and assigning of Resources
  • Budget Preparation
  • Monitoring and Evaluation

 

Posted Date: 12/7/2012 8:13:44 AM | Location : United States







Related Discussions:- Zero-base budgeting , Assignment Help, Ask Question on Zero-base budgeting , Get Answer, Expert's Help, Zero-base budgeting Discussions

Write discussion on Zero-base budgeting
Your posts are moderated
Related Questions
Outline Five characteristics of relevant cost

what is the topic about? what are the practical implications? what are the practical criticisms?

What is period cost Period costs are those costs which are reported as expanses of the period in question. These are cost which are not assigned to the product but are charged

Describe breadth indicators and market sentiment indicators? 1. Distinguish among technical and fundamental analysis. As well explain essential concepts underlying chart analys

How marginal costing would improve the problems faced in absorption costing on manipulation of profits.

Input or exogenous variables These are variables of two types: 1) Controlled variables: These are variables that can be controlled by management. By changing the input

Proprietary ratio/ equity ratio  Meaning: the ratio measures a relationship among proprietor's funds and the total assets. Objective: the objective of computing this ra

the break even point in dollorsales for rice company is48,000 and the company's contribution margin ratio is 40 percent. If Rice Company desires a profit of $84,000, how much wou

Question 1 The following items are found in the trial balance of M/s Sharada Enterprise on 31st December, 2000. Sundry Debtors

Algebraic method of the break even point The break even point can be computed by the following method: a) Units of sales volume . b) Budget total or in terms of money va