 Now, if it's anything that says favorable difference will typically be indicated with a large f favorable difference, and that's where the actual costs are less than the standard cost, and that would that would make sense, of course, because costs we don't like in terms of financial accounting. So if the actual cost is less than what we thought the cost should be, then in a sense we've done better than we had expected in some way, and therefore we have a favorable difference indicated with an f, unfavorable difference indicated with a large u will have the actual cost is greater than the standard cost. So if the cost that actually happened is more than the cost that we thought should happen, the standard, the thing that we should happen under normal conditions, then we have an unfavorable difference. Cost variance, computation. We're going to get into some math here. We'll look at the computations. Note this will make more sense when we do examples. We're just going to go through the formulas first, we'll take a look at the formulas, and then we'll take a look at some examples using actual calculations and hopefully that'll bring the formulas to life as we go through the formulas. Note that you're going to have these terms could work and have to shorten these things to like CV, AC, SC, and you're just going to have to get used to that because you don't want to have to write out the entire thing. And therefore you're going to have to just learn the terminology. So we have the cost variance is going to or CV is going to equal the actual cost AC minus the standard cost. So in other words, the cost variance equals the actual cost minus the standard cost. And then we're going to have the act with so then we're going to have to consider okay well what's going to be the actual cost. Or AC is going to equal the actual quantity times the actual price. So notice we're considering the actual cost we're breaking it down into its component parts, the component parts of course being the quantity times the price per quantity. So the quantity that we have times the price per quantity. Then we're going to have and we could break that down down to AC equals a q actual cost equals actual quantity times AP actual price. The standard cost then is going to equal the standard quantity. So that's what we would expect under normal conditions times the standard price. What we would think the standard price is under normal conditions or SC standard cost equals sq standard quantity times SP standard price. So let's take a look at a couple definitions as we go through this as well and hopefully these formulas seem when you look at them they start to be kind of self explained they seem to make sense right. So spend some time with the formulas but again you'll get a better idea of them as we go through problems and apply them to the problems. You want to keep this with you for some time however, so that you get down the lettering and be able to just basically see this information say oh that's cost variance. That's actual cost and then when we go into the actual formulas, you'll know what those items will be meaning through just the labels with them. So the actual quantity so a q the input material or labor used to manufacture the quantity of output. So when we think of actual quantity, we're thinking of it as that we're making things remember we make things units of inventory and that includes materials labor overhead. We're concentrating here on the materials and labor, we have the actual quantity in terms of material and labor being the units of input that we have whether that be units of material or typically ours in terms of the labor units. And that's different then of course because we're going to have to quantify those that's not in dollars we're talking about the materials quantity and then the standard quantity sq is the standard input for the quantity of output. So that's what we would expect to happen so we've got the actual what actually happens the standard kind like the budget the projecting what we think should happen under the normal conditions. And then we've got the actual price AP the actual amount paid to acquire the input material or labor. So now we have the actual price and again we're considering this in terms of material or labor that the production type of items when we make inventory labor material overhead we're concentrating on material and labor. When we consider those we're talking about the price of material then typically per unit and the price of the labor typically per hour or that's one way we could put it down into an hourly rate. So we'll have to talk about conversions of hours and what not how long it takes to make something but that's going to be the actual price. And then we've got the standard price and that's just the standard price is the expected price is kind of like the budget of price the standard what we would consider to happen under the normal conditions.