"Tight" standards are standards that are very demanding. For example, if a job can be done in two hours only if everything works perfectly and absolutely nothing goes wrong, then a labor standard of two hours may be too tight because things can go wrong. Machines can break down, jobs can get interrupted, there could be a power failure, or any number of things could delay the completion of the job. Whether the budgeting process was well-defined or not well defined is not relevant to the standards being used within the company. Furthermore, if the standards were developed using a bottom-up philosophy, there is little chance that they will be too tight. If anything, they might be too loose, because the people closest to the production process might build more extra time than necessary into the labor standards, in order to make sure the standards can be met. Therefore, a bottom-up philosophy of budgeting would not result in too-tight labor standards, so this is inconsistent with the consultant’s conclusion.
"Tight" standards are standards that are very demanding. For example, if a job can be done in two hours only if everything works perfectly and absolutely nothing goes wrong, then a labor standard of two hours may be too tight because things can go wrong. Machines can break down, jobs can get interrupted, there could be a power failure, or any number of things could delay the completion of the job. Fluctuations in manufacturing volume with short-term increases in output being followed by rapid, sustained declines in output can indicate an all-out effort to produce the quantities demanded followed by a reining in of costs in order to meet unrealistic labor standards. Therefore, this is consistent with the consultant’s conclusion, not inconsistent.
"Tight" standards are standards that are very demanding. For example, if a job can be done in two hours only if everything works perfectly and absolutely nothing goes wrong, then a labor standard of two hours may be too tight because things can go wrong. Machines can break down, jobs can get interrupted, there could be a power failure, or any number of things could delay the completion of the job. Incentive bonuses are generally based on successful performance which can be measured using standards. If bonuses are not being paid out, performance has not been what was expected and perhaps the expectations have been unrealistic. Therefore, this is consistent with the consultant's conclusion, not inconsistent.
"Tight" standards are standards that are very demanding. For example, if a job can be done in two hours only if everything works perfectly and absolutely nothing goes wrong, then a labor standard of two hours may be too tight because things can go wrong. Machines can break down, jobs can get interrupted, there could be a power failure, or any number of things could delay the completion of the job. Many unfavorable efficiency (quantity of labor used) variances could be a sign of an unrealistic standard. Therefore, this is consistent with the consultant's conclusion, not inconsistent. If the company continually uses more hours than anticipated, revisions to the labor standard may be necessary.
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