Question

Please explain to the best of your knowledge one or more of the following items:

1- Ideal performance

2- Attainable Standard

3- Challenging but achievable Standard

4- Management by Exception

5- Standard cost can be used for different activities please explain

Answer 1

1. Ideal Performance

Performance by a employee or management is said to be ideal when it meets its standards or benchmarks and bring efficiency and effectiveness in an organization and ultimately it will improve overall performance of organization.

2. Attainable Standard

standards which are achievable by employees with the best use of their skills and intelligence, which make an organization more competitive among competitors are known as attainable standard. These are better than ideal standards because these standard encourage employees to achieve and they get motivated. These standards are based upon efficient but not perfect operating conditions.

3. Challenging but achievable Standard

These standards are useful when absolute efficiency is required. These standards may motivate empolyees to work harder since they provide a realistic but challenging target. To achieve these standards company provide reasonable allowances, overtime and bonuses to employees.

4. Management by Exception

Management by exception is a practice where only significant deviations of actual performance from the standard is brought in the management's notice. This makes management to focus upon core functions of organization rather on unproductive issues.

5. Standard cost can be used for different activities

Standard costing is a type of estimation in which management sets cost targets for different activities and process which are going to be performed in upcoming fiscal year and evaluate them. This costing is useful to measure different types of variances from standard costs like material price, efficiency of labor, labor cost, overhead cost, material usage etc. This standard costing method can be used in various manufacturing and nonmanufacturing industries to their costs.