Updating standard cost

The setup of the capacity costs of assembled items consists of the following elements: Subcontractor costs are the costs that are associated with services that are provided by a company's outside vendors or subcontractors.Similar to material and capacity, subcontractor costs can consist of both direct and overhead amounts.As with materials, you can identify both direct and indirect elements of capacity cost.For example, the direct cost for a work center may be the established shop rate to perform a specific function.

The material cost of a produced item can be represented in two ways that correspond to the following cost calculation bases.An assembled or produced item can include subassemblies, which also consist of multiple components.The following key cost elements make up the total direct cost of a finished processed item: The setup of the material cost for purchased items that affect direct and indirect cost depends on the costing method that you have selected for the specified item.Standard costs can be maintained for items that are replenished through purchase, assembly, and production.

For each replenishment method, standard costs can consist of the following elements.

The actual cost to produce a product may differ from the estimated standard costs.