Incremental budgeting requires making adjustments to items included in the current budget (D). At the SPHR level, understanding budgeting methodologies is essential for effective resource planning and financial stewardship.

Incremental budgeting begins with the current (or prior-year) budget as a baseline and adjusts for anticipated changes such as inflation, headcount shifts, new initiatives, or cost reductions. It assumes that existing programs and expenses are generally valid, focusing attention on marginal changes rather than full re-justification.

Justifying every line item (A) describes zero-based budgeting, not incremental budgeting. Identifying new revenue sources (B) is not a core budgeting requirement for HR. Labeling fixed versus variable costs (C) is useful for financial analysis but not defining of incremental budgeting.

SPHR exam content distinguishes budgeting methods and emphasizes selecting the appropriate approach based on organizational stability, growth, and governance expectations.

References :

HRCI SPHR Exam Content Outline — Functional Area: Leadership and Strategy (financial management; budgeting).

HRCI SPHR Study Guide — Incremental vs. zero-based budgeting methods.

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