ACCA Applied Knowledge · Management Accounting · Standard costing system
Which type of standard assumes ideal operating conditions, with no allowance for wastage, idle time or machine breakdowns?
An ideal standard is the correct answer. It assumes perfect conditions with no wastage, idle time or breakdowns. Attainable standards, by contrast, include normal allowances, current standards reflect present conditions, and basic standards stay unchanged for long periods, so none of those match the description.
- AIdeal standardCorrect
- BAttainable standard
- CCurrent standard
- DBasic standard
Explanation
An ideal standard is based on perfect operating conditions with no losses or inefficiencies. Attainable standards allow for normal wastage and idle time. Current standards reflect present conditions, and basic standards remain unchanged over a long period.
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