Types of Standard Costing


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  • Ideal standard – assumes perfect production conditions with no mechanical failure, no stock-outs, no staff absenteeism etc. It is unattainable but is an indication of what to strive for.

 

  • Attainable standard – is a realistic target and is based on efficient working conditions with allowance made for machine breakdown , stock outs etc.

 

  • Basic standard – is a standard set for use over a long period of time and is used to compare with current standards to see the effect of changes in conditions over the years.

 

  • Current standard – is set to reflect a current condition so has limited use in time. In times of inflation such standards may be set monthly.

 


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