If managers are insensitive and use variances as a club morale will suffer

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Direct materials standards and direct labour standards are set by analyzing historical data, market conditions, and technological advancements. Companies can also use industry benchmarks or conduct time and motion studies to determine the time and materials required for specific tasks. Once standards are established, they are communicated to relevant departments and reviewed periodically to ensure they are still appropriate.

If Managers Are Insensitive and Use Variances as a Club