Final answer:
Standards in business are primarily used to support the planning and control processes of a firm. They serve as benchmarks for measuring performance, guiding managerial decisions, and influencing the calculation of unit costs, compensation, and work productivity.
Step-by-step explanation:
Standards are a crucial aspect of business that support the planning and control processes of a firm. They are not solely used for rewarding or penalizing employees but are part of a broader strategic management approach. Standards serve as a reference point for measuring performance and efficiency, guiding managerial decisions, and ultimately influencing compensation, effort, and the overall productivity of a business.
Using standards to calculate the unit cost of a product or service is a direct application in cost accounting, which helps businesses in pricing decisions and financial planning. Moreover, standards may directly or indirectly affect compensation - workers and managers could be rewarded for exceeding standards or could face consequences for not meeting them, reflecting the principles of effort and compensation.
Ultimately, standards have a multifaceted role that aligns with the goals of scientific management, which include increasing workers' efficiency as well as potentially influencing their pay based on performance improvements.