Zero-Based Budgeting is a technique of planing and decision-making which reverses the working process of traditional
budgeting. In traditional incremental budgeting, departmental managers only justify only increases over the previous year budget and what has been already spent is automatically sanctioned. No reference is made to the previous level of expenditure. By contrast, in zero-based budgeting, every department function is reviewed comprehensively and all expenditures must be approved, rather than only increases. ZBB requires the budget request justified in complete detail by each division manager starting from the Zero-base. The Zero-base is indifferent to whether the total budget is increasing or decreasing.
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budgeting method for a corporation or government in which all expenditures must be justified each year, not just amounts in excess of the previous year.
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