Standard Costing

bainbridged

Can anyone please tell me how to work out the standard cost of actual production in terms of direct labour hours in the below example?

Budgeted output - 15,000 units
Budgeted hours - 9,500 hours @ a rate of £15.00 per hour
Actual Output - 17,000 units

Monsoon

Ok, so the standard cost is the cost of the actual production at the budgeted rates.

So, using the budgeted figures, workout the budgeted number of hours per unit. Then multiply this by the budgeted hourly rate.

In your example, the standard cost per unit is 9500/15000 x £15

Then multiply this by your actual output of 17000 units.

Disclaimer: I've not done standard costing in 5+ years but I'm pretty sure I have it right! If not, apologies!

bainbridged

That's great thank you for your quick reply. :-)