Which of the following statements is true regarding standards?

A standard being described as a budget for one unit is accurate because standards are intended to provide a benchmark for what costs, revenues, and performance should look like on a per-unit basis. This allows businesses to assess performance, streamline operations, and measure efficiency effectively. When a company sets a standard, it typically considers the costs and resources expected to create one unit of product or service, which facilitates comparison against actual performance.

Practical application of standards can help identify variances and enable firms to investigate the causes of those discrepancies. Understanding how much each unit should cost or how much revenue should be generated helps in budgeting and controlling resources efficiently.

This approach to standards also assists in driving improvements by enabling realistic goals while holding departments accountable for performance on a per-unit basis.