FOUR TYPES OF BUDGETING

FOUR TYPES OF BUDGETING

1. INCREMENTAL

2. ACTIVITY BASED

3.VALUE PROFOSITION

4. ZERO BASED

1. INCREMENTAL BUDGETING

Incremental budgeting takes last year’s actual figures and adds or subtracts a percentage to obtain the current year’s budget. It is the most common method of budgeting because it is simple and easy to understand. Incremental budgeting is appropriate to use if the primary cost drivers do not change from year to year.  

2. ACTIVITY-BASED BUDGETING

Activity-based budgeting is a top-down budgeting approach that determines the amount of inputs required to support the targets or outputs set by the company