In standard costing normal standard is the average standard which it is anticipated can be attained over a future period of time, preferably, long enough to cover one trade cycle. Accordingly, this standard may be prepared once in 10 years.
types of standards
Attainable standards also are known as expected or practical standards is a standard which can be attained if a standard unit of work is carried out efficiently, a machine properly operated or materials properly used. This standard is most widely used in practice. The attainable standard is based on an efficient operating condition though not a perfect condition.
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;
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
In standard costing current standard is the standard established for use over a short period of time related to the current condition.
This standard is used to reflect the current condition. It can be equated to attainable standards during the period of stable prices and normal conditions. … Read the rest
In standard costing the basic standard is standard which is established for use over long period of time from which current standard can be developed. These standard remain constant for long period of time and hence they are also termed as long term standard.
They show trend over a period of time relating to material … Read the rest