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PRACTICAL STANDARDS
Ideal standards allow for no machine break-downs or work interruptions, and can be attained only by working at peak effort 100 percent of the time. Such standards often discourage workers and shouldn't be used for decision making.
Practical standards allow for "normal" machine down time, employee rest periods, and the like. Such standards are felt to motivate employees, since the standards are "tight but attainable". They are also useful for decision purposes, since variances from standard will contain only "abnormal" elements.
DIRECT MATERIAL STANDARDS
To illustrate the use of standard costs, consider Speeds, Inc...
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