What type of budgeting requires each manager to justify an entire budget request in detail?
A. Capital budgeting
B. Revenue and expense budgeting
C. Balance sheet budgeting
D. Zero-base budgeting
And your answer is? One of us will check it for you. What does your text say about these methods of budgeting?
The type of budgeting that requires each manager to justify an entire budget request in detail is D. Zero-based budgeting.
Zero-based budgeting is a budgeting process where each manager is required to build their budget from scratch, starting with a zero base. This means that instead of using historical data or incremental budgeting methods, all expenses must be justified and approved based on their merits and alignment with organizational goals.
In zero-based budgeting, managers are required to justify not only their overall budget request but also each line item and expenditure in detail. This analysis typically includes reviewing past performance, exploring alternative options, and identifying cost-saving measures, among other factors.
By requiring managers to justify their entire budget request in detail, zero-based budgeting aims to promote accountability, reduce inefficiencies, and ensure that resources are allocated to the most critical areas.