management accounting

1. ZERO BASED
BUDGETING
&
PERFORMANCE
BUDGET

2. BUDGET
• Estimation of revenue & expenses over a
period of time
• Usually prepared for one year
“Statement which show future estimation”

3. BUDGETING TECHNIQUE
• Traditional budgeting
• Zero based budgeting

4. TRADITIONAL BUDGETING
• Current year budget is prepared by making
changes to previous year’s budget by
adjusting expenses based on inflation rate ,
consumer demand, market situation etc.
Previous year budget consider as a base

5. ZERO BASED BUDGETING
• This technique was first used in America in
1962
• Start with zero balance
• Not consider previous year budget
• Expenses allocated & justify in plan
• Detailed plan is made describing each item in
budget allocation & what benefit
manufacturer receive from the company.

6. • There is no benchmarking from previous year
budget & performance
• Hence, each cost is re-evaluated

7. STEPS INVOLVED IN ZBB
OBJECTIVE OF BUDGETING
TO WHICH EXTENT IT IS TO BE APPLIED
DEVELOPMENT OF DECISION PACKAGES
COST & BENEFIT ANALYSIS
SELECTION,DECISION,FINALISING THE
BUDGET

8. PERFORMANCE Budgeting
• Budget based on functions, activities and
projects.
• Performance budgeting may be described as
a budgeting system, where input costs are
related to the end results, i.e., performance.
• Focus attention on the accomplishment rather
than means of accomplishment.

9. PROCESS of p.b
Decide goals and
objective
Decide set of
programmes
Implementation
Evaluation