Advanced In discussing the standard setting process for use within budgetary control and/or standard costing systems, the following has been written: ‘The level of standards appears to play a role in achievement motivation... ’

Required:

(a)Briefly distinguish between the motivational and managerial reporting objectives of both budgetary control and standard costing. Describe the extent to which these two objec¬ tives place conflicting demands on the stan¬

dard of performance utilized in such systems.

(6 marks)

(b) Describe three levels of efficiency which may be incorporated in the standards used in budgetary control and/or standard costing systems. Outline the main advantages and disadvantages of each of the three levels described. (6 marks)

(c) Discuss the advantages and disadvantages of involving employees in the standard setting process. (8 marks)

(Total 20 marks)

ACCA P2 Management Accounting