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2.2.4 Budgets

Budgets Key Definitions Budget: A target for costs or revenue that a firm or department must aim to reach over a given period of time. Income Budget: This involves setting a minimum figure for the revenue to be generated by a product or service, a department, or a manager.  Expenditure Budget: This involves setting a maximum figure for what a department or manager can spend over a given period of time in order to control costs.  Historical Budgeting: This involves setting a budget for the upcoming year based on previous figures on revenue and expenditure.  Zero Budgeting: This involves setting all future budgets to 0 in order to force managers to justify their spending levels.  Criteria: The 'yardsticks' that success, or a lack of success, is measured against.  Variance: The difference between the budgeted figure and the actual figure, this can be favourable or adverse depending on the budgets.  Favourable Variance: A difference between the bud

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