Which budgeting approach requires justification for every line item each year?

The correct approach that requires justification for every line item each year is zero-based budgeting. This method operates on the premise that each budget cycle starts from a "zero base," meaning that managers must justify all proposed expenses, rather than basing budgets on previous years' allocations. Each expense must be evaluated for its necessity and effectiveness, regardless of previous funding levels, leading to a more thorough and potentially more efficient allocation of resources.

This approach contrasts with incremental budgeting, where only the changes from the previous year are justified or modified, often making it less effective in addressing inefficiencies. Priority-based budgeting, while focusing on aligning funds with strategic priorities, does not require justification for every line item in the same rigorous manner that zero-based budgeting does. Activity-based budgeting allocates funds based on the activities that drive costs, but it does not necessitate comprehensive justification for each individual line item year after year. Thus, zero-based budgeting stands out for its requirement of thorough justification for all expenditures annually.