 In this presentation we will take a look at cost variance analysis. First we'll take a look at the process of the cost variance analysis. It'll look similar to the budgeting process. We'll go through the cycle of the cost variance analysis. We'll have the preparation of the standard cost performance report. So we'll put together in essence the standard which you can think of of the expectations similar to the budget but this with the cost variance. Then we'll compare the actual cost with the standard costs. So once the time period has then passed we could take a look at the actual costs, what actually happened, compare them to the standard costs. Then we can investigate the variances or differences of course by asking for explanations. We're going to say, hey, here's the variances. Here are the differences. What are the reasons? Why do we have these differences? And that of course will help us to correct problems that cause unfavorable variances. And we may look into the favorable variances as well. So note that as we consider these items we're going to be probably more concerned with unfavorable differences. Things that don't look good. Things where we performed under what we had been expecting to perform. But at the same time if our favorable differences are big or large then we know there's a problem there as well. It might be simply a problem with the budgeting process because we have some issue with it as well. So we want to look at those differences, whatever those differences are. And then we're going to prepare a standard cost performance report once again based on that new information.