Three types of standards are . . . . . . . .
A. Current standard, basic standard and normal standard
B. Currency standard, basel standard and actual standard
C. Actual standard, estimated standard and expected standard
D. Expected standard, ideal standard and current standard
Answer: Option A
Solution (By Examveda Team)
Current Standard:It represents the standards set for the current period based on current conditions. These are practical and realistic, reflecting what can actually be achieved under existing circumstances.
Basic Standard:
A long-term standard that remains unchanged over a period of time. It is used mainly to measure trends over several periods and to analyze variances historically.
Normal Standard:
This standard represents the level of performance which can be achieved under normal operating conditions, considering average past performance and expected future efficiencies.
Incorrect Options:
- Option B refers to unrelated or nonexistent types of standards.
- Option C mentions "actual" and "estimated" standards, which are not recognized categories in cost accounting standards.
- Option D combines “expected” and “ideal” standards inaccurately; while ideal standards exist, they are not part of the classic three types (current, basic, normal).
Correct Answer: A. Current standard, Basic standard and Normal standard
📘 Explanation:
In Standard Costing, three main types of standards are generally recognized:
🔹 1. Current Standard
Set for short periods, reflecting current conditions.
Useful for day-to-day control.
🔹 2. Basic Standard
A long-term standard that remains unchanged over many years.
Used for measuring trends and performance over time.
🔹 3. Normal Standard
Represents the average performance over a long period, considering normal operating conditions