Which budgeting approach organizes budget presentations by cost centers with alternative service levels?

Which budgeting approach organizes budget presentations by cost centers with alternative service levels?

• A. Line item budgets
• B. Performance Budget
• C. Program Budget
• D. Zero-based Budget

Answer: (D)

Zero-based budgeting starts from a clean slate each budgeting period, requiring justification for every cost item rather than simply rolling over previous spending. It typically organizes the presentation by cost centers or departments, and for each center it analyzes alternative levels of service and the corresponding costs, often using decision packages to compare options. This emphasis on evaluating different service levels within each cost center is what distinguishes it from other budgeting approaches. Line-item budgets group spending by category without linking costs to service levels; performance budgeting centers on outcomes and results, not on presenting alternate service levels per cost center; program budgeting organizes by programs or activities rather than by cost centers with multiple service levels.

Zero-based budgeting starts from a clean slate each budgeting period, requiring justification for every cost item rather than simply rolling over previous spending. It typically organizes the presentation by cost centers or departments, and for each center it analyzes alternative levels of service and the corresponding costs, often using decision packages to compare options. This emphasis on evaluating different service levels within each cost center is what distinguishes it from other budgeting approaches. Line-item budgets group spending by category without linking costs to service levels; performance budgeting centers on outcomes and results, not on presenting alternate service levels per cost center; program budgeting organizes by programs or activities rather than by cost centers with multiple service levels.