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Advantage and Disadvantages of Zero Based Budgeting
Advantages
1. Resources allocation is more efficient.
2. Focus attention on values for money and makes clear relationship between output and input.
3. Develops a questioning altitude and makes it easier to identify obsolete as well as inefficient and less cost effective operations.
4. Leads to greater management and staff knowledge of operations.
Disadvantages
1. Time consuming.
2. High skills essential.
3. May encourage wrong impression that every decisions must be made via budgets.
4. Short- term benefits may be emphasized to the detriment of long-term benefits.
These balances for a company x Raw materials $40,000 Work in process $30,000 Finished goods $60,000 for the current year the company estimated that it would work 150.000 mach
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