What is zero-based budgeting? How can this type of budgeting assist in the planning process? What are some disadvantages of zero-based budgeting?
Please respond in 1-2 paragraphs. Use Sales Budget as one type of budget
Also, please write a thoughtful response to the following response to the above question (1 paragraph):
Zero-based budgeting does not follow trending in sales. Zero-based budgets start with $0 and add in projected cost. Cost of sales would be sales commissions, salaries, and administrative expenses associated with the sales process such as advertising.
Managers often view budgeting as a game to beat rather than a cooperative planning exercise. Departments try to hoard money for undetermined uses just to avoid being penalized. This game creates a tremendous disadvantage to the organization, creating angst for the employee and manager, especially where commissions paid are actually a cost of sales. In this scenario, a high sales producer is less desirable to the corporation than a mediocre sales performer.Zero-based budgeting does not follow trending in sales. Zero-based budgets start with $0 and add in projected cost. Cost of sales would be sales commissions, salaries, and administrative expenses associated with the sales process such as advertising.
Managers often view budgeting as a game to beat rather than a cooperative planning exercise. Departments try to hoard money for undetermined uses just to avoid being penalized. This game creates a tremendous disadvantage to the organization, creating angst for the employee and manager, especially where commissions paid are actually a cost of sales. In this scenario, a high sales producer is less desirable to the corporation than a mediocre sales performer.