A formula on standard costs (input) for variance analysis

A formula on standard costs (input) for variance analysis

Standard cost per output unit for each variable direct-cost input

=

Standard input allowed for one output unit  (also refer to efficiency variance)

x

Standard price per input unit (also refer to price variance)

E.g.

Standard direct material cost per jacket [Standard cost per output unit for each variable direct-cost input]

=

2 square yards [Standard input allowed for one output unit 

x

$40 per square yard [Standard price per input unit]

= $80