ACCA Applied Knowledge · Management Accounting · Standard costing system
Which type of standard is set at a level that can be achieved only under perfect operating conditions, with no allowance for machine breakdowns, idle time or wastage?
An ideal standard is the type that assumes perfect operating conditions, with no allowance for breakdowns, idle time or wastage. It represents the best possible performance and is rarely achieved, unlike attainable standards, which include normal allowances for losses and delays.
- AIdeal standardCorrect
- BAttainable standard
- CCurrent standard
- DBasic standard
Explanation
An ideal standard assumes perfect efficiency with no losses, so it is rarely achievable in practice. An attainable standard allows for normal losses and delays. A current standard reflects present conditions, and a basic standard is left unchanged over a long period.
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