Difference Between Idle Cost and Standard Cost

Main Difference

Cost is a key part of organizations that ought to be successfully figured out how to acquire higher net revenues. Through appropriate arranging, compelling asset allotment and steady checking and control, costs can be kept up at a satisfactory level. Idle cost and standard cost are two normally utilized terms in cost dialogs. The key Difference Between Idle Cost and Standard Cost is that idle cost alludes to the banquet sworn off because of interruptions and stoppages in the creation procedure while standard cost alludes to a foreordained esteem or a gauge for a unit of an asset.

Comparison Table "Idle Cost and Standard Cost"

Idle Cost
Standard Cost
BaseDisruptions and stoppages in the production procedure.Predetermined or estimated.
Variance CalculationNot calculated separately.Calculated against the actual cost.
BenefitsNo economic benefits or drawback.Have economic benefit or drawback.

Brief Explanation Idle Cost VS. Standard Cost

Meaning Of Idle Cost

Idle or Opportunity Cost

Idle cost is the opportunity cost (advantage inescapable from the following best option) happened because of a status of non-creation or different disturbances in the business operation. There are numerous ways that an organization may encounter idle costs. Idle limit and idle work are two regular sorts of idle costs known as the capacity and the labor.  Idle capacity is the measure of limit not utilized for a generation. For the most part, it is exceptionally troublesome for a business to work at the greatest limit because of bottlenecks, which are different restrictions in the generation procedure. Idle labor happens when specialists are paid for the time that they are not included in the generation. When the work idle time is high, this outcome in expanded loss of benefits.

Any sort of cost can be idle, in this manner it doesn’t create any financial incentive to the organization. The administration ought to be aware of with respect to such circumstances and endeavor to diminish the bottlenecks in the generation procedure to make more esteem.

Meaning Of Standard Cost

Setting Standard Costs

Standard cost is a foreordained or assessed cost of playing out an operation or creating an item or administration, under ordinary conditions. For example, if an assembling association is thought of it as, will cause costs to the material, work and different overheads and create various units. Standard costing alludes to the act of relegating a standard cost for units of material, work and different costs of generation for a pre-decided era. Toward the finish of this period, the real cost brought about might be distinctive to the standard cost; therefore, a “fluctuation” may emerge. Standard costing can be effectively utilized by organizations with dreary business operations; therefore, this approach is exceptionally reasonable for assembling associations.

Key Differences Between Idle Cost vs Standard Cost

The major differences between the idle cost and standard cost are presented below.

  1. The main purpose of calculating the idle cost and standard cost is different.
  2. Idle cost alludes to the event done without because of disturbances and stoppages in the generation process. Standard cost is a foreordained cost or an expected for a unit of an asset.
  3. Idle cost differences are not computed independently; nonetheless, its belongings are caught in fluctuations that ascertain effectiveness (e.g. Work idle time variance). Variances are computed for standard cost contrasting and real costs.
  4. Idle cost dependable results in an unfriendly fluctuation since lingering assets bring no monetary benefits. Standard cost changes might be great (standard cost surpasses real cost) or unfavorable (genuine cost surpasses standard cost.

Conclusion: Difference Between Idle Cost and Standard Cost

The difference between the idle cost and standard cost is very simple. Idle cost is an outcome of generation stoppages or wasteful aspects while standard costs are resolved toward the start of a bookkeeping period and contrasted and genuine outcomes toward the finish of the period.

The connection between idle cost and standard cost is that lingering assets progressively affect differences since idle costs decrease general proficiency. While helpful, standard costing is a costly and tedious practice frequently not reasonable to littler organizations. Moreover, this is at times material to different sorts of associations that are not producing organizations.


Wikipedia: Idle or Opportunity Cost

Wikipedia: Standard Cost


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