Manufacturing firms set standards for the amount and price of direct materials, direct labor, and factory overhead consumed by their products. Standards establish a benchmark to be used in evaluating actual performance. They allow management to recognize when costs are not in line with the companys projections and to take corrective action.

(1) Describe a couple examples of standards in your daily life. For example, following the Student Code of Conduct requires you to follow rules.

(2) Read the following article - Raises for the Best and Also, the Rest. CEO Pay Often Does Not Match Performance. If you are a member of the Board of Directors for a publicly-traded company, what position would you take - tie company performance to CEO pay ? Or not? Why?