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(solution) What is zero-based budgeting? How can this type of budgeting


What is zero-based budgeting? How can this type of budgeting assist in the planning process? What are some disadvantages of zero-based budgeting?

Please respond in 1-2 paragraphs. Use Sales Budget as one type of budget


Also, please write a thoughtful response to the following response to the above question (1 paragraph):


Zero-based budgeting does not follow trending in sales. Zero-based budgets start with $0  and add in projected cost. Cost of sales would be sales commissions, salaries, and administrative expenses associated with the sales process such as advertising.

Managers often view budgeting as a game to beat rather than a cooperative planning exercise. Departments try to hoard money for undetermined uses just to avoid being penalized. This game creates a tremendous disadvantage to the organization, creating angst for the employee and manager, especially where commissions paid are actually a cost of sales. In this scenario, a high sales producer is less desirable to the corporation than a mediocre sales performer.

http://www.investinganswers.com/financial-dictionary/businesses-corporations/zero-based-budgeting/

 


Zero-based budgeting does not follow trending in sales. Zero-based budgets start with $0  and add in projected cost. Cost of sales would be sales commissions, salaries, and administrative expenses associated with the sales process such as advertising.

Managers often view budgeting as a game to beat rather than a cooperative planning exercise. Departments try to hoard money for undetermined uses just to avoid being penalized. This game creates a tremendous disadvantage to the organization, creating angst for the employee and manager, especially where commissions paid are actually a cost of sales. In this scenario, a high sales producer is less desirable to the corporation than a mediocre sales performer.

http://www.investinganswers.com/financial-dictionary/businesses-corporations/zero-based-budgeting/


Zero-Based Budgeting

 

Zero-based budgeting refers to a technique of budgeting in which the expenses should and must

 

be justified for each and every new period in the company. In this budgeting...

 


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