ACCA PM Syllabus D. Budgeting And Control - Methods used to derive Standard costs - Past Papers ^{2 / 4}

Which of the following describes a ‘basic standard’ within the context of budgeting?

A. A standard which is kept unchanged over a period of time
B. A standard which is based on current price levels
C. A standard set at an ideal level, which makes no allowance for normal losses, waste and machine downtime
D. A standard which assumes an efficient level of operation, but which includes allowances for factors such as normal loss, waste and machine downtime

The following statements have been made about different types of standards in standard costing systems:

(1) Basic standards provide the best basis for budgeting because they represent an achievable level of productivity.
(2) Ideal standards are short-term targets and useful for day-to-day control purposes.

Which of the above statements is/are true?

A. 1 only
B. 2 only
C. Neither 1 nor 2
D. Both 1 and 2