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In October the production manager made some changes to the production process in order to improve the quality of the soap and reduce the amount of material waste that occurs during the production process:
Use of an alternative supplier for all three materials. The quality was higher, but the new supplier charged a higher price.
A higher proportion of Lye and a correspondingly lower proportion of coconut oil were used in the product mix compared to the standard.
Use of new machinery designed to reduce the amount of work in progress wasted due to spillage and leakage.
The sales manager has reported that many customers have commented favourably on the improved quality of the soap and have ordered larger quantities than previously.Materials mix variance – Adv
Materials price variance – adv
Yield variance – fav
Sales volume variance – fav
I understood material price variance being adverse but with comments can u explain mix and yield variance
And if Yield is fav will sales volume variance is favourable in all cases?You must watch Johns video on mix and yield variances
Also read this.
https://www.accaglobal.com/uk/en/student/exam-support-resources/fundamentals-exams-study-resources/f5/technical-articles/mat-yield.htmlThe mix variance is adverse because a higher proportion of the more expensive materials was used compared to the standard.
Yield new machine means reduced waste during production, leading to a higher yield from the materials used. Even with the higher costs associated with the new supplier and the change in material mix, the overall efficiency in production has improved, resulting in less wastage.
Regarding the sales volume variance, it is favorable due to the positive customer feedback on the improved quality of the soap, which has led to increased orders. However, while a favorable yield variance often correlates with a favorable sales volume variance, it is not guaranteed in all cases.
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