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To produce 19 litres of product X, a standard input mix of 8 litres of chemical A and 12 litres of chemical B is required.
Chemical A has a standard cost of $20 per litre and chemical B has a standard cost of $25 per litre.
During September, the actual results showed that 1,850 litres of product X were produced, using a total input of 900 litres of chemical A and 1,100 litres of chemical B.
The actual costs of chemicals A and B were at the standard cost of $20 and $25 per litre respectively.
Calculate the yield variance?Ho do we flex the 1850?
For the yield variance we take the actual total input of 2,000 litres (900 + 1,100) at standard mix which is 8/20 x 2,000 of A, and 12/20 x 2,000 of B, costed at standard cost per litre.
We compare this with the standard input for the actual production of 1,850 litres. From the cost card, for every 19 litres produced they should use 8 litres of A and 12 litres of B. Therefore to produce 1,850 litres they should have used 8/19 x 1,859 of A and 12/19 x 1,850 of B. Again we cost out at standard cost.
I do suggest that you watch my free lectures on mix and yield variances because I work through a very similar example.
Thank you,i did have a go at the free lectures, I have got the concept no, Thanks again
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