COST ACCOUNTING
STANDARD COSTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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are rigorous but attainable.
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are the standards generally used in a master budget.
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reflect optimal performance under perfect operating conditions.
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will always motivate employees to achieve the maximum output.
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Detailed explanation-1: -Question 1:-Ideal Standards:-The correct answer is Option A-Reflect optimal performance under perfect operating conditions.
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: -Companies set standards at one of two levels: Ideal standards represent optimum levels of performance under perfect operating conditions. Normal standards represent efficient levels of performance that are attainable under expected operating conditions.
Detailed explanation-4: -Ideal standards are those that can be attained only under the best circumstances. They allow for no machine breakdowns or other work interruptions and they call for a level of effort that can be attained only by the most skilled and efficient employees working at peak effort 100% of the time.
Detailed explanation-5: -The standards that have no errors and that has the maximum outcomes are called ideal standards. It is the perfect standard for management. The standards that are adopted or set to motivate the employees of the organization are called currently attainable standards.