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Govt.

Engineering College, Ajmer


A presentation on ZERO BASED BUDGETING
Submitted to Miss Mitisha Sharma Submitted by Pallavi Jain Shweta Choudhary Sunita Aludiya Mba(I sem.)

CONTENT
Introduction Features Stages of ZBB Advantages Disadvantages Managerial accounting Relationship with managerial accounting Companies using ZBB

INTRODUCTION
Zero based budgeting is a method of budgeting where all activities are re-evaluated each time budget is set.

FEATURES
All budget items, both old and newly proposed, are considered totally fresh. Decision packages are ranked in order of priority. Amount to be spent on each budget item is to be totally justified. Department objectives are linked to corporate goals. The main stress is not on how much a department will spend but on why it needs to spend. Managers at all levels participate in a zero based budgeting process.

STAGES OF ZBB
The stages of zero based budgeting are: Corporate objective should be established. Identification of decision units. Analysis & documentation of each unit. Development of decision package. Review and ranking of decision packages by heads.

ADVANTAGES
Efficient allocation of resources, as it is based on needs and benefits. Drives managers to find cost effective ways to improve operations. Detects inflated budgets Increases communication and coordination within the organization. Identifies and eliminates wasteful and obsolete operations.

DISADVANTAGES
It is time-consuming and exhaustive. Mere increases paper work. Limited use in profit-making organization. Forced to justify every detail related to expenditure. ZBB must be clearly understood by managers at various levels to be successfully implemented. In a large organization, the volume of forms may be so large that no one person could read it all.

MANAGERIAL ACCOUNTING
Accounting information that managers use for decision making .

RELATIONSHIP WITH MANAGERIAL ACCOUNTING


Offers the funders the insight into how budgeting decision are made. Both systems appear to contradict each other.

COMPANIES USING ZBB


To confront conventional thinking and resource allocation. To help complex organizations. To align the resources with the mission of the enterprise. To remove non-value adding cost and fund key strategic imperatives. Applied in governmental areas, public sectors, private sectors and non-profit organizations.

THANK YOU