Question

Zero-base budgeting (ZBB) differs from traditional budgeting in terms of its requirement to:

A. Consider the time-value of money in the budgeting process.
B. Start the budgeting process from the lowest level of the organization.
C. Minimize the existence of "budgetary slack."
D. Justify all budgeted operations and associated spending.
E. Incorporate continuous-improvement standards in the set of financial and operating budgets.

Answer 1

Zero-base budgeting (ZBB) differs from traditional budgeting in terms of starting from the lowest level of the organization, minimizing budgetary slack, and incorporating continuous-improvement standards.

Step-by-step explanation:

Zero-base budgeting (ZBB) differs from traditional budgeting in terms of its requirement to:

1. Start the budgeting process from the lowest level of the organization. Unlike traditional budgeting, which often builds upon the previous year's budget, ZBB starts from scratch and requires each department to justify all of its activities and spending.
2. Minimize the existence of 'budgetary slack.' ZBB encourages managers to critically evaluate their budget requests and eliminates any padding or excessive spending.
3. Incorporate continuous-improvement standards in the set of financial and operating budgets. ZBB focuses on efficiency and effectiveness, promoting incremental improvements and optimizing resource allocation.