Ideal standards represent performance under:
AAverage conditions
BMost favourable conditions
CWorst conditions
DPast three-year average
Answer & Solution
Correct answer: B. Most favourable conditions
1. Ideal standards assume the best possible material prices, the highest output, the best equipment, and maximum efficiency.
2. They are intentionally unattainable in practice.
3. Variances against ideal standards exaggerate inefficiency.
4. Hence ideal standards represent performance under most favourable conditions.
_Source: ICAI BoS Inter Paper 3, Ch 13 "Standard Costing", §13.2 (i)_
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