What is incremental budgeting, Managerial Accounting

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Incremental budgeting

Incremental budgeting uses a budget prepared using a last period budget or actual performance as a base with incremental amount asses for the new budget period. The allocation of resources is account changing circumstances. Furthermore, it encourages spending up to the budget to make sure a reasonable allocation in the next period. It leads to a spend it or lose it mentality.

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