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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

 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% 100 - 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 Cost 5 hrs 10\$ 50\$ Total Standard Cost 1100\$ Estimated Profit 10% 110\$ Total Standard Cost 1210\$

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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Accounting Education: Standard Cost Example
Standard Cost Example
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Accounting Education
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