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Piele SA started its budget from zero, and continued to re-evaluate and adjust targets throughout the operating year; an example of this is shown in the adjusted columns in Exhibits 6 to 9. By using zero-based budgeting, Piele SA was forced to examine operations and expenses in order to plan and forecast for the upcoming year.
Piele SA used sales as the main driver behind its budget. By having accurate forecasted sales, Piele SA would have a solid foundation for all other budgets, including Direct and Indirect Cost of Goods Sold, Administrative, and Commercial categories. Sales did not achieve budgeted targets, and Piele SA attempted to adjust budgets accordingly, even if the nature of the cost was fixed...
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