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Standard costing

1.2 Standard cost card

Once standard costs for a product or service have been set, they are presented in a
standard cost card. A standard cost card for a product, showing the variable
elements of production cost per unit, might look like this:

Standard cost card: XX1
$

Direct materials: 10 kg @ $5 50
Direct labour: 12 hours @ $11 132

––––
Prime cost 182

Variable production overhead: 12 hours @ $9 108
––––

Variable production cost 290
––––

For each of the variable costs, the standard amount and the standard price are
given.

Direct material: standard quantity (10kg) × standard price ($5 per kg)

Direct labour standard hours (12 hours) × standard rate ($11 per hour)

Variable production standard hours (12 hours) × standard rate ($9 per hour)
overheads

Note: The standard hours for labour and overheads are usually the same as we
normally assume that variable overheads are absorbed on the basis of labour hours.

These standard data provide the information for a detailed variance analysis, as long
as the actual data are collected at the same level of detail.

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