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The standard hours define the normal work hour for an individual during a workweek. This is considered the time duration that can improve the productivity and efficiency of working in an individual. If one works according to the standard hours, then the efficiency and activeness to get involved in the work and work perfectly to achieve the target and goal set by the company during a normal work duration.
Let’s understand standard hours in detail with the help of an example.
ABC company manufactures three products A, B and C in one of their cost centers. It is measured that standard labour hour required to produce these three products in an hour is 10 units of A, 20 units of B and 25 units of C.
The standard hours for this product would be 10 units of A, 20 units of B and 25 units of C.
Budget production of three products A, B and C in period 1 is:
Product A- 10000 units
Product B- 15000 units
Product C- 20000 units
The total standard hours required to produce these units in an organization is:
Product A- 10000/10= 1000 standard hours
Product B- 15000/20= 750 hours
Product C- 20000/25= 800 hours
Total hours required to produce three units is 1000+750+800= 2550 hours