Zero Based Budgeting

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Zero Based Budgeting

A system of budgeting where each department or division of a company must justify all expenditures and allocations rather than simply increases over the previous fiscal year. That is, the budget is made with every department starting at zero dollars to spend, and each department must demonstrate need for what it wants to receive. Zero-based budgeting is advantageous because it is more detail-oriented than other forms of budgeting; among other things, it makes it easier to detect and eliminate over-inflated budgets. On the other hand, zero-based budgeting is more difficult and time consuming to put together and often has a bias toward departments that directly produce revenue instead of departments like R&D.
References in periodicals archive ?
Gajrawala noted that Zero Based Budgeting for the old A-B business is in place from January 1st.
No wonder there is so much political opposition to the introduction of an annual top-down zero based budget.
The reason I objected to this latest increase is because I believe that if all major spending departments had carried out a zero based budget for 2009/2010 the need to inflict this crippling 4.