CA Intermediate · Cost and Management Accounting · Standard Costing
Which one of the following is the correct description of a 'current standard' in standard costing?
A current standard is one established for use over a short period and related to the conditions prevailing at the time. It differs from a basic standard, which stays unchanged for long periods, and from an ideal standard, which assumes perfect efficiency without any losses.
- AA standard that is fixed for a long period and not revised, used as a stable yardstick
- BA standard that reflects the level of performance actually attained in the immediately preceding period
- CA standard established for use over a short period and related to current conditionsCorrect
- DA standard that assumes ideal conditions with no wastage, idle time or machine breakdown
Explanation
A current standard is set for use over a short period and is related to the conditions prevailing at that time. A basic standard is the one kept unaltered for a long period, and an ideal standard assumes perfect conditions, so those options describe other types.
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