Standard Cost Example

>> June 4, 2011

This standard cost example explains you, "What are the main  standard elements of cost standard?" How can we use different formula of standard costing use in for calculating standard cost? How will standard cost be useful for calculating standard selling price.

In this example, we will take three elements of cost.

1. Standard Direct Material Cost

2. Standard Labor Cost

3. Standard Overhead Cost

Standard quantity or standard hours of working

Standard rate per unit or standard rate per hour

Total standard cost or standard sale
1. Standard Direct
Material Cost
Less Normal loss @ 10%
- 10
 1000 $
- 100$
90 900$
2. Standard Labor Cost 10 hrs 10 $ 100 $
3. Standard Overhead Cost
 Standard Variable
Overhead Cost
 5 hrs  10$  50 $
Standard Fixed Overhead
5 hrs  10$  50$
Total Standard Cost
Estimated Profit 10%
Total Standard Cost

On the basis of above standard table, we can calculate standard cost per unit and standard selling price per unit

Standard Cost per unit = $ 1100 / 90 units = $ 12.2 unit

Standard Selling price per unit = $ 1210 / 90 units = $ 13.4 per unit

Related : Standard Costing

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