ideal standard definition

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Types of standards in standard costing

In cost accounting, actual performance is compared with standard performance so that to establish the adverse or favorable variance from the standard set as a benchmark. Adverse variance (if it is significant) need to be investigated and corrected. Thus a company can develop a standard performance, and such standard can be one of the followings;

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What is risk of material misstatement?

What is ideal standard?

Ideal standard is one method of setting standard in standard costing so as to be used in variance analysis. It refers to result from perfect performance under perfect conditions. Ideal standards makes no provisions for normal losses, ineffciencies, wastage of labour and material or machine down time as result of this there is always are adverse variances when ideal standards … Read the rest