It provides management with a consistent method of comparing actual performance with planned performance.
It provides a means of ensuring that production resources are purchased and used efficiently.
In establishing standards management can examine and appraise existing practices and procedures to ensure cost-effectiveness and efficiency.
It can inculcate cost-conciousness in the staff.
It helps to motivate staff by setting realistic standards.
Using variance analysis performance ca be monitored and improvements in work methods can result.
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