Why is using standard cost important for Ecolab's planning organization?

Using standard cost is important for Ecolab's planning organization because it simplifies reporting to stakeholders. Standard costs provide a benchmark for evaluating performance and cost control by establishing expected costs for products or services. This consistency allows for easier communication of financial results and operational efficiency to various stakeholders, such as management, investors, and regulatory bodies.

By relying on standard costs, Ecolab can create reports that are more comprehensible, making it easier for stakeholders to assess variances between expected and actual performance. This, in turn, enhances decision-making processes and fosters greater transparency within the organization.

In contrast, options that suggest ignoring demand planning, being the only method for inventory management, or restricting supply planning activities do not align with the fundamental purpose of standard costing, which is to enhance planning, control, and reporting, rather than limit it.