Question
What are the main basis of setting standards?
Solution
There are chiefly four basis for setting standards: (i) Quantity, (ii) Quality, (iii) Time, and (iv) Cost.
Quantity Standards are related to production, sales, stock, etc. Quality Standards are related to raw material finished goods, customers’ service and employees’ morale. Time Standards refer to the time consumed in the production of goods. Similarly, Cost Standards refer to labour, material and other expenses.
