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Monday, March 9, 2009

SETTING UP OF STANDARD COST

A standard cost by definition is an estimate correlating a technical specification of materials
and labour to the prices and wage rates with the addition of overhead for a prescribed level of
output. It is thus a measure in quantities, hours and value of the factors of production. There
are three main parts of standard costs, viz., (a) direct material, (b) direct labour, and (c)
overhead expenses.

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