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A revision of F2 topics
1.3 Types of standard
A standard cost is based on the expected price and usage of material, labour and
overheads. There are four main types of standard:
Attainable standards
 based upon efficient (but not
perfect) operating conditions
 include allowances for normal
material losses, realistic
allowances for fatigue, machine
breakdowns, etc.
 may motivate employees to work
harder since they provide a
realistic but challenging target
 most frequently encountered type
of standard
Current standards
 based on current working
conditions
 useful when current conditions are
abnormal and any other standard
would provide meaningless
information
 do not attempt to motivate
employees to improve upon
current working conditions and, as
a result, employees may feel
unchallenged
Illustrations and further practice
Now try TYU 3 in Chapter 1
Basic standards
 long-term standards which remain
unchanged over a period of years
 sole use is to show trends over
time for such items as material
prices, labour rates and efficiency
and the effect of changing
methods
 standards may demotivate
employees if, over time, they
become too easy to achieve and,
as a result, employees may feel
bored and unchallenged
Ideal standards
 Based upon perfect operating
conditions
 there is no wastage or scrap, no
breakdowns, no stoppages or idle
time
 may have an adverse motivational
impact since employees may feel
that the standard is impossible to
achieve
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