Different Budgeting Methods

What are the different budgeting methods? Which budgeting method is used in your organization?

Made your response with a minimum of three paragraphs with three sentences each. The response should have references and citations.

I work at Physician Regional Medical Center in Naples Fl.

different budgeting methods

Budgeting is an essential tool used by organizations to plan and control their financial activities. It involves the process of estimating the income and expenses for a specific period and allocating resources accordingly. There are several budgeting methods used by organizations, including incremental, zero-based, activity-based, and participative budgeting. The incremental budgeting method is the most common and involves making slight changes to the previous year’s budget. The zero-based budgeting method, on the other hand, involves starting the budget from scratch and requires each expense to be justified. Activity-based budgeting focuses on the activities that the organization needs to perform and allocates resources accordingly. Finally, participative budgeting involves involving different departments and levels of the organization in the budgeting process.

In my organization, Physician Regional Medical Center, we use the incremental budgeting method. This method has worked well for us because it allows us to make small adjustments to our budget while still maintaining stability in our financial activities. It is easy to implement, and it does not require a significant amount of time and effort to prepare. Moreover, it is less disruptive to the organization’s operations because it does not require a complete overhaul of the budgeting process. This method also allows for the continuation of essential projects and programs, which may have been put on hold if a more disruptive method, such as zero-based budgeting, was used.

In conclusion, organizations use different budgeting methods, and each method has its advantages and disadvantages. The choice of the budgeting method depends on the organization’s size, complexity, and objectives. In my organization, we use the incremental budgeting method, which has proven to be effective in maintaining financial stability while allowing for slight adjustments to our budget. It is essential to choose the appropriate budgeting method to achieve financial goals and objectives.


Anthony, R. N., & Govindarajan, V. (2007). Management control systems. McGraw-Hill Education.

Mihret, D. G., & Yismaw, A. W. (2007). Budgeting as an instrument of public financial management system reform: An overview. The Ethiopian Journal of Business and Economics, 1(1), 25-43.

Nouri, H., & Parker, R. J. (2013). The impact of budgeting on managerial performance and motivation: A case study of a multinational organization. Journal of Applied Accounting Research, 14(1), 71-87.

Scroll to Top