The major advantage of zero-based budgeting is that:

Zero-based budgeting (ZBB) is a method where all expenses must be justified for each new budget period, starting from a "zero base." This is fundamentally different from traditional incremental budgeting, which uses the previous period's budget as the baseline. The core process of ZBB requires managers to meticulously evaluate every function within their department, analyzing its needs and costs as if it were a new initiative. This rigorous justification process forces them to challenge existing practices, re-evaluate priorities, and actively seek more efficient or cost-effective alternatives to accomplish their objectives. This critical review and consideration of alternatives is a primary advantage of the ZBB approach.

B. This describes incremental budgeting, where existing programs are often funded by default with minor adjustments, which is the opposite of the ZBB philosophy.

C. This is a characteristic of incremental budgeting. In ZBB, managers must justify all budget items, both old and new, from scratch.

D. While ZBB can identify inefficient programs, their elimination is a management decision based on the review, not an automatic consequence of the process.

1. ASIS International. (2021). Protection of Assets (POA): Business Principles. Alexandria

VA: ASIS International. In the chapter on Financial Management

the section on Budgeting Methods explains that ZBB requires a complete justification of all programs and expenditures for each budget cycle

forcing a review of operations and alternatives.

2. Pyhrr

P. A. (1977). The Zero-Base Approach to Government Budgeting. Public Administration Review

37(1)

1–8. https://doi.org/10.2307/974503. On page 2

Pyhrr

the originator of the ZBB concept

states

"Zero-base budgeting requires each organization to evaluate and review all programs and activities systematically... [and] requires managers to identify and evaluate alternative methods of accomplishing objectives."

3. Dean

B. V.

& Cowen

S. S. (1979). The Use of Zero-Base Budgeting in Industry. The Journal of the Operational Research Society

30(11)

1021-1026. https://doi.org/10.2307/3009519. This paper highlights that a key benefit of ZBB is that it "forces an organization to examine alternative ways of providing services and performing activities" (p. 1023).