2.2.4 BUDGETS

• Adverse variance

  Negative variance e.g higher costs than budget
• Budget

  A financial plan of income and expenditure prepared/agreed in advance
• Favourable variance

  Positive variance e.g lower costs than budget
• Historical budgeting

  A budget based upon previous financial figures
• Variance analysis

  Shows the difference between budgeted and actual figures and can be calculated at the end of a financial period, once actual figures are known
• Zero based budget

  A type of budget where no money is allocated for spending unless it has firstly been justified