A. The ideal, perfect or theoretical level of output assumes that there are no breakdowns, no waste and no time lost to illness, and that the workers are already working at maximum efficiency. If standards are set using this capacity they will be unattainable. This is not the best basis for measuring controllable production inefficiencies. Furthermore, if ideal performance standards are used, overhead costs will be underapplied.

B. The key in this question is in the words "to measure controllable production inefficiencies." Engineering standards based on attainable performance should be used in standard setting, because attainable performance takes into consideration a normal amount of time lost, normal amounts of waste, and a normal learning curve. Comparing actual output to this level will bring out variances from these normal amounts of losses. Production inefficiencies above and beyond the normal will be recognized. It is these production inefficiencies that are controllable. The other, normal losses are not controllable. Once the controllable inefficiencies are recognized, they can be dealt with.

C. Standards set on the basis of recent average historical performance don't reflect possible changes in technology and other changes that might take place. This is not the best basis for measuring controllable production inefficiencies.

D. Normal level of capacity is an average expected level of production within the time frame of several years given the reasonable expectations of effective and efficient production as well as customer demand. This is not the best basis for measuring controllable production inefficiencies.