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Zero based budgeting differs from traditional budgeting because it
Ajustifies every rupee afresh each period
Bcarries last year's figures forward
Cbudgets only for variable costs
Dapplies solely to capital spending
Answer & Solution
Correct answer: A. justifies every rupee afresh each period
1. Traditional budgeting starts from the previous period's figures and adjusts them.
2. That carries forward whatever inefficiency was already there.
3. Zero based budgeting starts from a base of zero.
4. Every proposed rupee has to be justified afresh for the coming period.
5. It is therefore slower to prepare, which is the trade off against the discipline it imposes.
_Source: ICAI Cost and Management Accounting Ch15 'Budgets and Budgetary Control', section 15.8_
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