The utility of standard help the management in fixation of prices and in laying down production policies.
- Standards costs help the management in fixation of prices and in laying down production policies.
- The help in readily showing up and then elimination of avoidable wastages and losses.
- They provide constant and uniform bases for management on the operational efficiency of workers and other members of the staff.
- 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.
- Delegation of authority becomes effective the concerned men know what they have to achieve and by what standard they will be judged.
- The whole concern in stimulated with a dynamic forward looking mentality.
- Performance of employees at all levels can be judged objectively, this enables the concern to promote and regard the right person.
- Standards act as a ‘yardstick’ to measure the actual performance and the efficiency of labour and other factors.
- Valuation of closing stock is facilitated by the standard cost of production.
- As standards are set for every element of cost, the costing procedures are simplified.
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