ACCA Applied Knowledge · Management Accounting · Standard costing system
Which standard is most likely to be used on a standard cost card if management wants the standards to motivate employees to achieve a stretching but attainable level of performance?
An attainable standard is best, because it assumes efficient but realistic working with normal allowances for wastage and idle time. Staff see it as achievable, so it motivates. Ideal standards are unrealistic and often demotivating, and basic standards soon become outdated.
- AIdeal standard
- BAttainable standardCorrect
- CBasic standard
- DCurrent standard based on last year's actual results
Explanation
An attainable standard allows for normal wastage, idle time and breakdowns, so it is demanding but achievable and tends to motivate. Ideal standards assume perfect conditions and often demotivate; basic standards are left unchanged for long periods.
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