ACCA Applied Knowledge · Management Accounting · Standard costing system
Which of the following standards is most appropriate for a company that wants a standard which is challenging but achievable, assuming efficient operations with allowance for normal losses, waste and machine downtime?
An attainable standard is the correct choice because it assumes efficient operation while allowing for normal losses, waste and machine downtime. It is challenging yet achievable, unlike an ideal standard, which assumes perfect conditions, or a basic standard, which stays unchanged over long periods.
- AIdeal standard
- BAttainable standardCorrect
- CBasic standard
- DCurrent standard based on last year's actual results
Explanation
An attainable standard assumes efficient but realistic operations, allowing for normal losses, waste and downtime. An ideal standard assumes perfect conditions with no allowance, so it is not achievable in practice. A basic standard is left unchanged for long periods and is used mainly for trend comparisons.
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