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3 Types of Budgeting

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39 views

3 Types of Budgeting

Uploaded by

vijaykumartax
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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The three main

Budgeting methods
by Nicolas Boucher

OUTPUT Activity Based


Top-down approach where you
derive the activities needed (input)
to achieve your targets (output).

For example, to grow by 10%, you need to

INPUT acquire 100 new customers. With a


customer acquisition cost of 5,000$, you
need to plan 500,000$ as customer
acquisition budget.

Zero Based
Every expense needs to be justified.

Budgets are then built around what is


needed for the upcoming period,
regardless of the previous one.

+ Advantage: ideal for cost reduction


- Drawback: time consuming method

Incremental
Take last year figures and add or
subtract a percentage to calculate
your budget.

+Advantage: simple & quick


-Drawback: perpuates inefficiencies/
one-offs & creates budgetary slack

nicolasboucher.online Designed using resources from Flaticon.com

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