What advantages might it offer over the existing system.

You are the management accountant of a group of companies and your managing director has asked you to explore the possibilities of introducing a zero-base budgeting system experimentally in one of the operating companies in place of its existing orthodox system. You are required to prepare notes for a paper for submission to the board that sets out:

(a) how zero-base .budgeting would work within the company chosen;

(b) what advantages it might offer over the existing system;

(c) what problems might be faced in introducing a zero-base budgeting scheme;

(d) the features you would look for in selecting the operating company for the introduction in order to obtain the most beneficial results from the experiment.

Solution:

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