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Basic standard

Basic standard: a standard cost held unchanged for many years purely to show cost trends over time, unlike ideal or attainable standards, which are reset regularly for current variance analysis.

ByHoang TruongUpdated

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A furniture maker fixed the standard cost of oak at €140 per table in 2015 and has never revised that figure. Today's actual cost is €210 per table, a 50% rise over eleven years. That comparison is what a basic standard reveals, the long-run trend. The attainable standard, revised every year, is the figure used for this month's variances.

Where it fits
SubjectManagerial AccountingAdvancedTopicStandard Costing & Variance AnalysisAdvanced

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PracticeCORE

Since 2016, a bakery has kept the standard cost of flour per loaf fixed at €0.42, even though the market price of flour has risen sharply since then. Separately, every year the bakery restates a different standard cost figure to reflect current, efficient operating conditions, and it is this restated figure that is used to compute this month's variances. Which type of standard is the €0.42 figure?

Select an answer to check your understanding.