The correct answer is: Budgets and standards can be drawn up in all cicumstances.

The use of standards is limited to situations where repetitive actions are performed and output can be measured. Budgets can be prepared for all functions, even where output cannot be measured.

A budget aids control by setting financial targets or limits for a forthcoming period. Actual achievements or expenditures are then compared with the budgets and action is taken to correct any variances where necessary. A standard also achieves control by comparison of actual results against a predetermined target.

Budgets and standards are interrelated because a standard unit production cost can act as the basis for a production cost budget.

Budget and standards both involve looking to the future - they are used to forecast what is likely to happen given a certain set of circumstances.