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Disadvantages of incremental budgeting
a) Incremental budgeting suppose activities and method of working will continue in the same way
b) No incentive for developing their development new ideas
c) No incentive to decrease costs
d) Encourages spending up to the budget so that the budget is maintained next year
e) The budget may become out of date and no longer relate to the level of activity or type of work being carried out
f) The priority for resources may have changed as the budget were originally set
g) There may be budgetary slack built into the budget which is never reviewed. Managers might have overestimated their needs in the past in order to obtain a budget which is simpler to work within and which will permit them to achieve favorable results.
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