Adding a percentage to the previous year's budget is simple but may lead to larger increases; this describes which budgeting approach?

• A. Line Item Budget
• B. Zero-Based Budget
• C. Percentage Budget
• D. Programming and Planning Budget

Answer: (C)

Incremental budgeting uses last year’s numbers as a base and applies a fixed percentage increase to determine the next year’s budget. It’s quick and easy to implement because you’re not revisiting every line item from scratch. But the downside is that those percentage increases tend to compound, so even small annual boosts can grow into larger absolute increases over time, sometimes without reflecting actual needs.

The other approaches work differently: line item budgeting organizes spending by category and may not rely on a yearly percentage base; zero-based budgeting starts from zero and requires justification for every expense; programming and planning budgeting focuses on program objectives and evaluating alternatives rather than automatic increases. The scenario described fits the incremental/percentage budgeting method.