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If there is budgeted normal loss? On which basis we should calculate material price, usage, mix yield variance? On gross basis or net basis.
For example
If one 35kg finished unit requires
Material A 10 kg
Material B 15 kg
Material C 11 kg
And normal loss is 1 kg
All quantities given are standard quantities.
My question is where should i use 35 kg and where should i use 36 kg for in material variance formulae ?For price variance you use actual quantities purchased.
For the mix variance you use the actual total quantity used and compare actual mix with standard mix.
For yield variance you compare actual total input (i.e. total quantity used) with the standard total input for the actual output (which in your example would be 36/35 x the actual production). Both quantities at standard mix and standard cost.
Have you watched my lecture on this?
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