The standard cost set could be basic, ideal, attainable or current.
They can be revised periodically to reflect changes in the organizations operating conditions. E.g. changes in technology.
However, since the ideal standards assume perfect operating conditions, they would be unattainable in real life, which has normal operating problems. Such as idle time and machine breakdown, idle time and employee slowdown due to fatigue.
But the standard must be set high enough such that although achievable, it has to be worked for. Attainable standards should provide a challenge to employees by giving them a tough but realistic target: thus it motivates employees and management to achieve high levels of output.
But to be meaningful, attainable standards need to be revised regularly so as to affect the conditions expected to prevail during the period in which the standards would be applied.
Of all the standards attainable standards are likely to produce the highest level of motivation especially when the employees are adequately involved in setting them.
Since basic standards cannot be used for analyzing current efficiency levels, a current periods standard can be developed for the basic standards. The current period standard can then be used to analyze the current period performance.
Current standards are useful especially in inflationary conditions where current standards could be set for a 3 month period or on a monthly basis to reflect the changes in prices.
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