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When to know whether we should use weighted average cost or std cost per unit or litre for yield variances that have a certain % of loss. I have seen in past papers they sometimes use weighted average cost and sometimes std cost per unit.
This is how I calculate:
Expected output for given input: actual input multiplied by % of loss
Actual output: $abc
Difference * weighted average cost = varianceIt doesn’t matter which method you use to calculate the yield variance – if they are applied properly then they all give the same answer.
I show the way that I find the easiest to remember in my free lectures on mix and yield variances.
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