Question

A standard cost or production standard that assumes maximum operating conditions and 100% efficiency at all times is called a(n):

A. attainable standard.
B. ideal standard.
C. past experience standard.
D. average standard.

Answer 1

The standard cost or production standard assuming maximum operating conditions and 100% efficiency is called an ideal standard. Ideal standards represent a scenario with no waste or inefficiencies, unlike attainable, past experience, and average standards, which are based on more achievable or historical measures. Option b

Step-by-step explanation:

The type of standard cost or production standard that assumes maximum operating conditions and 100% efficiency at all times is referred to as a ideal standard. This concept falls under the realm of managerial accounting and cost-control measures.

An ideal standard does not account for normal production interruptions, such as downtime, maintenance, or employee rest periods. It represents a scenario where all processes are running at their best possible performance without any waste or inefficiencies.

In contrast, an attainable standard would set targets that are challenging yet achievable under normal operating conditions. A past experience standard would use historical data to set benchmarks, while an average standard would be based on average past performance. Understanding these standards is crucial for businesses to set realistic goals and measure productivity and efficiency accurately. Option b