Budgeting

Question 1

how does incremental budgeting work

Answer 1

consider current/last years spend level and adds a percentage for inflation

Question 2

what are the three main steps of zero base budgeting

Answer 2

define organisational activities (descriptions of what activities need to be carried out),
evaluation and ranking of activities,
allocation of resource

Question 3

main problem with zero base budgeting (zbb)

Answer 3

large amounts of extra work,

difficult to rank activities that appear to be equally important

Question 4

formula for working out how much, say raw materials will need to be purchased when you have opening inventory, closing inventory and expected material usage

Answer 4

closing inventory + material usage - opening inventory

Question 5

how do you organise a budget

Answer 5

reciepts,
…
payments,
…

Question 6

do you put depreciation through a budget

Answer 6

no take it off (unsure)