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.

What is ideal standard in standard costing?

Ideal standard costs: these standard costs represent perfect performance. They assume 100% efficiency, that there are no losses or idle time. They represent the minimum costs that are possible under the most efficient operating conditions. Currently attainable standard costs are the most suitable for companies to use.

What are the main types of standards?

Following are different types of standards:

• Basic standards.
• Normal standards.
• Current standards.
• Attainable (expected) standards.
• Ideal (theoretical) standards.

  Which standards are basic standards?

  Basic Standards are the unaltered standards which are used over for a longer period of time and do not reflect current conditions. These standards are not useful from the cost of control point of view as they consider only fixed costs.

  What expected standard?

  Expected Standard means using standards, practices, methods and procedures conforming to law and exercising that degree of skill and care, diligence, prudence and foresight which would reasonably and ordinarily be expected from a skilled and experienced person engaged in a similar type of undertaking and in …

  What are the four basis of standards?

  There are chiefly four basis for setting standards: (i) Quantity, (ii) Quality, (iii) Time, and (iv) Cost. Quantity Standards are related to production, sales, stock, etc. Quality Standards are related to raw material finished goods, customers’ service and employees’ morale.

  What are types of standard costing?

  There are different types of standards that can be set such as ideal, attainable, basic and current standards. The features of standard costing are related to the objectives of standard costing.

  Which is the best description of an ideal standard?

  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.

  What makes the achievement of ideal standards possible?

  The achievement of such standards requires highly skilled and motivated workers and the best possible use of production facilities. In short, we can say that the ideal standards can only be achieved under the best and perfect work circumstances.

  Why are ideal standards not common among companies?

  In short, we can say that the ideal standards can only be achieved under the best and perfect work circumstances. The use of ideal standards is not common among companies because they are based on highly strict assumptions that do not allow even the normal inefficiencies.

  What are the advantages of setting practical standards?

  Practical standards have the following advantages: While setting practical standards management does not assume the perfect, but normal working conditions. Practical standards take into account all normal wastage and inefficiencies and can therefore be used for inventory planning and forecasting cash flows.