By-products are sometimes called joint products or co-products. Common costs are those costs incurred before products are separated from each other. Common costs can be precisely allocated to each joint product. When only additional costs are assigned to the by-product, the resulting profit in the by-product sales is understated. Equivalent production units for joint products are calculated in the same way as for single product. With joint products, common costs can be allocated completely to the main product. Joint products are considered to be of approximately equal importance. Shrinkage spoiled units, and defective units are different terms for the same type (cause) of loss. For normal losses, equivalent units of production refers to equivalent good units. Normal spoilage in one department can increase unit cost in following departments even without any spoilage occurring in the following departments. Most companies use theoretical standards in standard cost accounting. The labor rate variance is the difference between (1) the actual hours of labor worked the standard rate per hour and (2) the standard hours of labor allowed X the actual rate (per hour). "Variances" under standard costing are determined by comparing actual costs of the produced with the standard costs of those units