The utility of standard help the management in fixation of prices and in laying down production policies.



  1. Standards costs help the management in fixation of prices and in laying down production policies.
  2. The help in readily showing up and then elimination of avoidable wastages and losses.
  3. They provide constant and uniform bases for management on the operational efficiency of workers and other members of the staff.
  4. Management, through the study of variances, needs to concentrate only areas and problems which call for its attention i.e., the system management by exception’ can be practiced.
  5. Delegation of authority becomes effective the concerned men know what they have to achieve and by what standard they will be judged.
  6. The whole concern in stimulated with a dynamic forward looking mentality.
  7. Performance of employees at all levels can be judged objectively, this enables the concern to promote and regard the right person.
  8. Standards act as a ‘yardstick’ to measure the actual performance and the efficiency of labour and other factors.
  9. Valuation of closing stock is facilitated by the standard cost of production.
  10. As standards are set for every element of cost, the costing procedures are simplified.


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