ECONOMICS

Detailed explanation-1: -Ideal standards allow for machine breaking down time and other normal inefficiencies. If the actual price or quantity exceeds the standard price or quantity, the variance is unfavorable. (Managers should not waste time investigating insignificant variances.)

Detailed explanation-2: -(ii) An ideal standard is one that could be achieved only under perfect operating conditions. It makes no allowances for events such as normal losses, machine breakdowns or idle time.

Detailed explanation-3: -Answer and Explanation: Option (D) is the correct answer. Standard cost is used as the tool for measuring efficiency for controlling the cost of production. Standard cost is part of the cost accounting process.

Detailed explanation-4: -The standards that allow for no machine breakdowns or other work interruptions and that require peak efficiency at all times are referred to as: ideal standards. Which of the following statements concerning practical standards is incorrect?

Detailed explanation-5: -The ideal standard provides in monitoring costs and measuring the employee’s efficiency levels. It helps in increase the production by reducing the cost per unit as well as increase profits.