A. Incremental budgeting usually takes the previous period budget and make adjustments to develop a budget for a following period.

B. Zero-based budgeting is the budgeting method in which the current year budget is prepared for various levels of service that may be provided without any reference to, or use of, the prior period's budget. Though this method is more time consuming and difficult for all of the people involved, there are a number of advantages to the company as a result of using this method. Because the budget is built up from zero, each manager must justify all of the expenses in his or her department. Each component is evaluated from a cost-benefit perspective and priorities are made. Zero-based budgeting enables the company to identify expenses that are not value adding or that should be reduced due to some development in production methods or something similar. C. Incremental or traditional budget usually assumes that all activities are legitimate and worthy of receiving budget increases to cover any increased costs. In ZBB all activities need to be justified each year.

D. This is usually a major feature of a capital budget.