Question:
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.