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USERS OF STANDARD COSTS d Costs and Operating Performance Measurer 315 Manufacturing, service, food, not-for-profit organizations and even financial some extent. institutions all make use of standards (in terms of either costs or quantities) to Auto service centers offer set labor time standards for the completion of certain work tasks and then measure actual performance against these standards. Fast- food outlets such as Jollibee, McDonalds have exacting standards as to the quantity of meat going into a sandwich, as well as standard for the cost of the meat. Hospitals have standard costs for laboratory tests, for food, laundry and other items for each occupied bed. In short, the business student is likely to run into standard costs concepts in almost any line of business that she or he may enter. BENEFITS OF STANDARD COSTS When standard costs are set carefully and used widely, they provide benefits to an organization such as: 1. Managers and employees become cost conscious because variances between standard costs and actual costs are reported, studied and their causes determined. Thus, these standards provide a measuring device calling attention to cost variations. In turn, these standards serve as a compass that guide managers toward improvement. 2. They aid management planning by providing the unit amount for budgeting. Also in the process of setting standards, managers thoroughly study all factors affecting costs and oftentimes discover how operations can be improved. 3. Standard cost systems integrate managerial, accounting and engineering functions. Coordination is encouraged because all elements of the organization are striving for the same goal. 4. Although initially, standard cost systems might appear to be costly to use because of the start-up investment, using standards can save data processing costs