A budget is a targeted amount of cost or revenue that the company will hope to achieve which can also be split up into certain departments of a company. A budget is drawn up by looking at past and present figures and then trying to predict future needs. Zero budgeting is a type of budgeting which starts afresh each year and does not just modify past figures.
Budgets can be compared with actual outcomes to find the variance. A variance is known as adverse if the company is disadvantaged due to the variance. A variance is known as favourable if the company benefits due to the variance.