Sample Solution

Incremental budgeting is a budgeting process in which the current year’s budget is based on the previous year’s expenditures (Romer, 2016). This type of budgeting involves making small adjustments to existing budgets as opposed to creating an entirely new one every year. This approach can be used for both revenue and expenses, taking into account increases and decreases in each category over time. It is typically used by governments or organizations that have limited resources and need to find ways to maximize available funds. The main advantage of this approach is that it allows for quick responses to changes, allowing organizations to adjust their spending accordingly while still staying within their overall budgetary limits (Koller et al., 2017).

Zero-based budgeting (ZBB) is a method of budgeting where all expenditures must be justified from scratch, with no consideration given to prior years’ numbers or allocated amounts (Friedman & Schilling, 2015). This approach requires analyzing all expenses line by line before determining whether they are necessary and appropriate for the upcoming fiscal period – even if those same costs were approved in the past budgetary cycles. With this method, any expense above a certain threshold needs justification from a higher authority before being approved for expenditure. ZBB often takes more effort than incremental budgeting but can help ensure better allocation of resources and discourage wasteful spending within an organization since all plans need approval before being implemented (Bragg & Moore III, 2013).

Combining these two methods provides flexibility as well as control over how money is spent during different financial periods; it also encourages accountability within an organization since there will always be someone responsible for justifying why certain expenses are necessary or desirable at any given point in time (Greene & Thompson Jr., 2018). By utilizing both incremental and zero-based approaches together, companies can take into account historical trends while ensuring that they are not simply throwing money away on unnecessary costs due lack of proper oversight and evaluation processes (Vance et al., 2018). Combining these two methods offers advantages such as improved performance management through clear identification of savings opportunities; increased clarity around goals through detailed tracking; better alignment between objectives/strategies/activities/resources/budgetary allocations; enhanced transparency across departments; greater visibility into progress towards outcomes; faster decision making process with extended planning horizons etc.