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Its an approach to increase your bottom line by managing your costs segment through per-assigning or allocating a limit/capping. In case of Zero base this capping is not pre-assigned or assigned as "Zero", so for every penny of expense plan you need a detailed explanation for its justification.
Budgeted amount and expense are equal.
A method of budgeting in which all expenses must be justified for each new period. Zero-based budgeting starts from a "zero base" and every function within an organization is analyzed for its needs and costs. Budgets are then built around what is needed for the upcoming period, regardless of whether the budget is higher or lower than the previous one.
ZBB allows top-level strategic goals to be implemented into the budgeting process by tying them to specific functional areas of the organization, where costs can be first grouped, then measured against previous results and current expectations.
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