Standard Cost
Finance
Standard Cost
Predetermined expected cost of material, labor and overhead used for planning, valuation and variance analysis.
Examples
- 01The standard cost of a gear for this year is EUR 12.50, based on planned material prices, cycle time and overhead rates.
- 02Each month, actual cost is compared with standard cost, and every variance above EUR 5,000 is explained.
- 03Standard costs are updated once a year, so improvements made during the year show up as positive variances.