ACCA Applied Knowledge · Management Accounting · Standard costing system
Which type of standard is most likely to motivate employees while remaining realistic for a standard cost card?
An attainable standard is most likely to motivate staff. It allows for normal wastage, idle time and breakdowns, so it is demanding but achievable. Ideal standards are usually unreachable and demotivating, while basic standards that never change become out of date and unhelpful for control.
- AIdeal standard, assuming no waste or idle time
- BAttainable standard, allowing for normal losses and reasonable inefficiencyCorrect
- CBasic standard, left unchanged for many years
- DLast year's actual cost, used without adjustment
Explanation
An attainable standard is challenging but achievable, allowing for normal waste and idle time, so staff are likely to be motivated. Ideal standards usually cause adverse variances and demotivate; basic standards become outdated and give little useful information.
Did you get it right without looking?
One question tells you little. A timed set on Standard costing system shows your real accuracy, how long you take and where you lose marks.
More Standard costing system questions
- Keswick Co budgeted sales of 4,000 units at a standard selling price of $50 and a standard variable cost of $30 per unit. Actual sales were …
- A company's standard labour rate was $14 per hour. Because of a shortage of skilled workers, it used more highly skilled staff paid $16 per …
- Which of the following standards is most appropriate for a company that wants a standard which is challenging but achievable, assuming effic…
- A company makes one product. Each unit needs 4 kg of material. Normal waste in production is 20% of the input material. The material price i…
- Which of the following is a recognised benefit of using a standard costing system?
- A company sets its standard labour rate using a standard that assumes all staff are paid at grade B, $12 per hour. Production in the period …