III.+Explanation+of+Examples

=**Unit Standards**=

(See Module 15000 Explanation and Examples)
 * Price standards =** a predetermined price for a good or service, based on historical price and other costs


 * Quantity standards =** the number of inputs allowed per unit of output


 * Unit Standard Cost =** Standard Price x Standard Quantity

Can be classified as:
 * How to establish standards?**
 * 1) Ideal Standards
 * 2) Currently Attainable Standards
 * 3) Kaizen Standards

Three reasons to use a standard costing system:
 * How to use standard costing?**
 * 1) Cost Management
 * 2) Planning and Controlling
 * 3) Decision Making and Product Costing

=**Standard Cost Sheets**=


 * Standard cost sheet =** a list of costs that should be applied to per unit of output
 * **Description** || **Standard Price** ||  || **Standard Usage** || **Standard Cost** || **Total** ||
 * Direct materials: ||  ||   ||   ||   ||   ||
 * Brushes || $5.00 || X || 1.25 per bursh || 6.25 ||  ||
 * Paint || 15.00 || X || .25 per paint can || 3.75 ||  ||
 * Total direct materials ||  ||   ||   ||   || $10.00 ||
 * Direct labor: ||  ||   ||   ||   ||   ||
 * Machine operator || $12.00 || X || .25 hour || $3.00 ||  ||
 * Total direct labor ||  ||   ||   ||   || 3.00 ||
 * Overhead: ||  ||   ||   ||   ||   ||
 * Variable overhead || $10.00 || X || .05 hour || $0.50 ||  ||
 * Fixed overhead || $20.00 || X || .05 hour || 1.00 ||  ||
 * Total overhead ||  ||   ||   ||   || $1.50 ||
 * **Total standard unit cost** ||  ||   ||   || **$14.50** ||

=**Direct Material and Direct Labor Variances**=


 * Direct labor rate variance =** what has been paid and what should have been paid to direct labors
 * __Direct Labor Rate Variance:__ **LRV =** (AR x AH) - (SR x AH)
 * __Direct Labor Efficiency Variance:__ **LEV =** (AH x SR) - (SH x SR)


 * Direct material price variance =** difference from actual material cost and direct material that was budgeted
 * __Direct Material Price Variance:__ **MPV =** (AP x AQ) - (SP x AQ)
 * __Direct Material Usage Variance:__  **MUV =** (SP x AQ) - (SP x SQ)


 * Total Budget Variance =** (Actual Price x Actual Quantity) - (Standard Price x Standard Quantity)

=**Mix and Yield Variances**=


 * Mix variance =** when actual costs are different than the standard costs
 * Mix Variance = E (AQi - SMi) SPi


 * Yield variance =** standard cost for standard yield less actual cost for actual yield
 * Yield Variance = (Standard yield - Actual yield)SPy