What is an Attainable Standard?
An attainable standard is a benchmark in standard costing set at a realistic level for workers, reflecting achievable performance under expected operational conditions during a specific costing period. Unlike the sky-high ambitions reflected in ideal standards, or the general expectations depicted by expected standards, attainable standards serve as a practical, feet-on-the-ground target that encourages efficiency without demoralizing the workforce with unachievable goals.
The Role of Attainable Standard in Business
In the riveting world of business accounting, setting an attainable standard is akin to drawing a finish line that is visible, yet requires a good sprint. It’s calibrated carefully to ensure that employees can, in fact, reach it with the right mix of effort and skill, thus fostering a productive environment rather than a back-breaking marathon. Think of it as the managerial equivalent of urging your pet turtle to victory in a backyard race: challenging yet feasible.
Comparison with Expected and Ideal Standards
While the attainable standard is rooted firmly in the realm of the achievable, the expected standard waves from the land of average expectations, embodying what management forecasts under normal conditions without pushing into stretch territory. On the other hand, the ideal standard gleams on the horizon, a beacon of ‘what could be’ under absolutely perfect circumstances, often igniting motivation but sometimes just lighting up the path to disappointment.
Practical Implications
Adopting an attainable standard can significantly optimize cost control and resource allocation in manufacturing and service environments. By establishing clear and achievable goals, businesses can enhance operational efficiency, drive workforce motivation, and maintain a healthier relationship between predicted and actual performance.
Related Terms
- Standard Costing: A cost accounting method that assigns expected costs to product costs, serving as a financial telescope for viewing budgeted versus actual expenses.
- Variable Costs: Costs that vary directly with the level of production or sales volume. They flutter like leaves in the wind, always syncing up with your business’s rhythm.
- Fixed Costs: These are your business’s steadfast companions—costs that remain constant regardless of fluctuations in production or sales.
Suggested Further Reading
- “Cost Accounting: A Managerial Emphasis” by Charles T. Horngren – Delve deeper into how cost accounting serves as a pivotal tool in financial strategy.
- “The Balanced Scorecard: Translating Strategy into Action” by Robert S. Kaplan and David P. Norton – Explore how integrated performance measurement systems can align business activities to the vision and strategic goals.
In the thrilling arena of managerial accounting, the attainable standard acts as the reasonable coach, pushing for excellence within the bounds of human capabilities. Remember, even if the bar is set just right, the jump can still be spectacular!
