Standard Costs Formulas

 

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The following case study provides a work order cost analysis of the manufacture of a child's wagon. The assumptions used are 100 percent yield, zero scrap, 100 planned quantity, and noncrew labor.

The Open Work Order Report for this example includes the bill of materials and quantities required for a planned quantity of 100 "parent" wagons. The 8' x 4' aluminum sheet yields two 4' x 4' sheets after sheering.

Standard Material Costs

Standard material costs are shown below.

1 - 4' x 4' sheet = 0.75

2 - axles = 0.30

4 - wheels = 2.00

1 - handle = 0.75

  $3.80 per wagon

The following rules determine how standard and average unit costs are defaulted.

Expand/Collapse item  Standard Valuation

 

Expand/Collapse item  Average Valuation

 

The following formula can be used to calculate the standard material costs.

Standard Material Cost =
Planned Parent Qty x Unit Cost x Unit of Measure Conversion x Qty per Parent

Total Planned Material Costs        = $380.00

 

Expand/Collapse item  Standard Material Cost Calculation Example

 

For more information, see:

Fixed and Variable Overhead for Material Issues Formulas

Standard Labor Costs Formula

Open Work Order Report