First of all are you going via Reykjavik because it is cheap or because you actually want to see some of Iceland? If it's only because of the cost, then you might end up spending more money on additional flights, trains etc. than if you were just flying directly to where you want to go.
Secondly why have you chosen these destinations? Out of genuine interests or merely by looking at a map? Especially the Austrian part does not strike me as destinations for young people, my own impression visiting Vienna on a backpacking trips was, that it was a very pretty city, but mainly suited for seniors who enjoy classical music, the opera and eating cakes (i know broad stereotypes). I think the same could be said for Salsburg and thw Wachau Valley, though I have never been there. For a group of young people I would choose Berlin over Munich, then head to Prague, Budapest and then head down to ex Jugoslavia. Bosnia is very cheap, with beautifull scenery, a dramatic history, friendly people and a very different feel than Western Europe. Croatia is also cheap, though not as cheap as Bosnia, and it's Adriatic coast is stunning (google places like Split and Dubrovnik or just watch a few episodes of Game of Thrones).
Regarding costs your major expenses will be transport, both getting to Europe and getting around. Trains can be quite expensive in Germany, but there are savings to be made by heading east. check out www.seat61.com for everything there is to know about trains.
Lodging will be another big expense. Hostels dorms are the chepest way to go in the cities, check out sites like Hostelworld.com. The major cities will have a hostel scene, with several hostels competing and keeping prices low, there is no need to book to far in advance. Smaller cities and rural towns will have fewer or no hostels, so you might end up in hotels, which are usually more expensive. If you only intend to visit cities then forget about camping, since campsites are in the outskirts of most cities. also consider if carrying all that camping gear around is worth it to save a few bucks on one or two nights.
The last mayor expense is food and drink. Self catering in supermarkets will be the cheapest way to go. Most hostels have kitchens where you can cook yourself and for lunch you can buy bread and cheese etc. Drinking can quickly dry up your budget, fancy clubs and bars tend to be the most expensive. Buying beers from the supermaket will be the cheapest, but some hostels have their own bars, so they might not allow you to drink your own beers. Hostel bars are usually not too expensive and a great place to meet other travellers. Also the beer tend to get cheaper the further east you go.
