Updating standard cost
As with material costs, you can express capacity overhead as an indirect cost percentage or a fixed overhead rate.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.
The indirect cost for a work center may represent some general factory expenses, such as lighting, heating, and so on.
This increases the material cost of the components that are consumed when producing a parent item.
You set up scrap cost for materials on either the production BOM or routing.
These costs are frozen until a decision is made to change them.
The actual cost to produce a product may differ from the estimated standard costs.