Economics · Public Finance
An analysis of Zero Based Budgeting (ZBB) vs Traditional Incremental Budgeting highlights their operational trade-offs. Given that ZBB involves comprehensive justification of all decision packages from a base of zero, whereas traditional budgeting anchors on historical baselines, which of the following is an accurate strategic conclusion regarding their implementation?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Decision packages are only used in traditional budgeting to explain why costs have increased by 10 percent.
- 2Traditional budgeting is better for government agencies because it allows for the automatic funding of all programs without any review.
- 3If an organization faces extreme time constraints and has a very stable operational history, it should prioritize traditional budgeting over Zero Based Budgeting to maintain administrative efficiency.✓
- 4Zero Based Budgeting is more efficient than incremental budgeting because it requires less documentation and is easier to explain to employees.
Correct answer
If an organization faces extreme time constraints and has a very stable operational history, it should prioritize traditional budgeting over Zero Based Budgeting to maintain administrative efficiency.
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