“That’s essentially correct. Using the price and quantity standards, budgeted costs for labor, materials, and overhead are established for each unit product. The standards are based on efficiency expectations and will demand less resource usage than our traditional incremental budgetary approach. The unit price and quantity standards are used to develop budgets and, once actual costs are in, to break down the budgetary variances into price and efficiency variances. A standard cost system provides more detailed control information than a budgetary system using normal costing. We can hold our managers responsibility for meeting the established standards.”