5 stages involved in the zero-based budgeting system

5 stages involved in the zero-based budgeting system

The zero-based budgeting system is a budgeting system that requires every item of expenditure to be justified as if a particular activity or program is taking off the first time.

The following are stages involved in zero-based budgeting systems

  • Identification of decision unit/tasks and formulating operational plans
  • evaluating the whole budget into decision packages based on decision units/tasks to which cost are assigned
  • Ranking in priority the decision packages covering the activities, both new and existing in a competitive manner
  • Determination of cut off point, to choose the packages which can be included and those to be rejected, and
  • Prioritization/selection of the packages, to highlight the ones which fit in with the available resources

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