As for the Disadvantages,:

 One would be that it Assumes activities and method of working will continue in the same
way - The key assumption behind incremental budgets is the constant stability of the
company’s operations. Therefore, the budgets are typically not responsive to potential
changes that can result from unforeseen circumstances or some unanticipated factors.
 Another is that there is No incentive for developing new ideas - This type of budgeting
may discourage the production of innovative ideas and growth. Since new budgets are
based on figures from previous budgets, there is a little room for the financing of
completely new ideas or activities. Thus, the budgeting process discourages the
implementation of new ideas and fosters a conservative business environment.
 Lastly, is it Encourages spending up to the budget so that the budget is maintained next
year - Incremental budgeting can result in unnecessary spending for a company. The
reason behind this is that the departments within a company generally tend to spend all
the money that they’ve been allocated in a budget one year in order to obtain a greater
amount of money in the next budgeting period. Incremental budgeting takes the position
of increasing each part of the budget by a certain amount each year. However, some
departments may not, in fact, need more money each year – but they will be allotted an
increase anyway, simply because that’s how the budgeting process works. In this way,
the budgeting process may be wasteful and less than optimally efficient.