- Standard Costing : It is the practice of using expected costs
instead of actual costs and periodically recording variances to
show the difference between expected and actual costs.
It is inadeqaute becasue of the numerous assumptions taken while
formulating an expected cost/revenue that may not be viable in real
life
- Past Period: Here we use actual costs/revenue that have been
incurred in the past to compare current year performance.
It is inadequate because Past periods cannot be an effective
performance measure due to change in market structures, economy,
Costs overall etc.
- Budget Targets: In this performance is measured on the basis of
if actual performance is able to achieve a predetermined budgeted
target for the year.
It is inadequate due to potential discrepencies in setting up the
budget level. What assumption have been taken to arrive on the
budgeted targets and are they justified ?
- Benchmaring : It compares the performance of similar
companies/competitors in the same market and then determined the
performnace dependning on or in comparison of industry
performnace.
It is adequate , because benchmarking inadvertendly takes into
account macro-level factors that might impact the working and helps
determine if you are doing good enough according to the market
scenario.
Thus the correct answer is d.