In what situation might a company prefer incremental budgeting?

A company might prefer incremental budgeting when stability and slight growth are expected due to the approach's focus on minor adjustments to existing budgets rather than a complete overhaul. Incremental budgeting involves taking the previous period's budget as a baseline and making small modifications, which aligns well with environments where operations are stable and predictable.

In such situations, this budgeting method helps maintain continuity and efficiency, as it allows management to allocate resources without the need for intensive analysis or extensive strategic shifts. Incremental budgeting is beneficial for organizations aiming to control costs effectively while still accommodating minor changes in expenditures to support incremental growth, thereby ensuring that budgeting remains manageable and straightforward.

Other options, like tight financial resources, major operational changes, or the introduction of a new product line, typically require more adaptive budgeting methods that can address fluctuating needs and uncertainties, which wouldn't suit the incremental approach as effectively.