Hi John, if we take produced 5000 units and calculate what cost should be according to std mix and minus the actual mix costs, we will take different result. Like 5000 units at 2kg will be 10000 kg where we got 9900 and variance is 100 kg. Is this not correct?

Hi John, When doing the yield variance, in the first column, the section for actual total input at std mix why did we use quantities of what the mix should have and not the units of what the mix actually was (10133 vs 9900 and 5067 vs 5300)?

Dear John, While calculating the yield variance, why we had to take the ratio of material used in mix variance. Why could we not just take the actual usage of material X and Y as defined in question?.

Thank you sir, great class. i have a doubt. Usage variance is the sum of Mix and Yield variane. If in the question its just asks us to find Usage variance, How can we find it directly without finding Mix and yield…?

I have done that and in question the actual usage is 15,200kgs whereas the standard usage for actual production is 15,000 kgs, and the difference of them at standard cost is coming out to be $1,600(A), but in the answer sheet it鈥檚 coming out to be $300(A). Can you please tell me what鈥檚 wrong with this?

I hope you are great Sir, thank you for your time and your informative lecture I understand your lecture lesson very well but in regards to yield variance according to my understanding its the difference between the actual output and the budgeted output so the total difference is 15200-15000=200 (A) then we can allocate this variance to X and Y it will give us the yield variance in KG then we can times those by the standard cost per kg. It will give you the same result. Is that right Sir,

Thank you Sir for your easy to understand lectures! I would be glad if you answer my following question. Let’s assume that our final product is Fruit Juice which is measured in litters and we use 3 type of material to produce final product. And the materials we use are measured in different unit of measure. Sugar and fruit (cherry) are in kg, but flavor enhancer is in liter. And of course adding them in different proportion rather than in standard mix will still give us final product of Juice so there is certainly mix effect there. My question is can we still use the same approach in mix calculation in this case? Thank you for your answer in advance!

Thanks John for breaking down your lectures to everyone’s understanding. Please I’lld like to ask how we got the 2/3 and the 1/3 that was used to multiply the total material usage of 15200 in the mix variance. Thanks in advance for your response.

On the standard cost card printed in the lecture notes, the total input for 1 unit is 3kg of which 2 kg (i.e. 2/3) are Material X and 1 kg (i.e. 1/3) are Material Y

Sir, you say that when analysing the toal yield variance between the different materials, they will always both be favourable or adverse. However, in the example, the yield variance is not in the same proportions as the standard mix. Therefore, theoretically, this could provide a result where although the total yield variance is either A/F, the indivudual variances could be both A and F? How can we ignore the effect of the yield variance on the mix variance?

No – the yield variances must all be favourable or must all be adverse. Given that we are using standard mix for both the actual total usage and the standard total usage it cannot possibly be otherwise. There is nothing theoretical about it! 馃檪

Just simple enough to be easy understand, Thanks John. I just got confused in one point in the yield variance section; why we did use 10,133kg X & 5,067kg Y rather than 9,900kg X & 5,300kg Y at the actual total input as these are actually our inputs. I will leave it here and also will drop it in ask tutor forum. Appreciate your advice John.

Thanks John. The difference between the mix and yield variances gives the material usage variance. The mix variance shows the effect of changing the proportion of the mix of material input and the yield shows the difference between the actual and expected yield or output.

Eldor488 says

Hi John, if we take produced 5000 units and calculate what cost should be according to std mix and minus the actual mix costs, we will take different result. Like 5000 units at 2kg will be 10000 kg where we got 9900 and variance is 100 kg. Is this not correct?

John Moffat says

We do not get a different result.

Look again at the table in the answer – the variance for A is 100kg, but we need the variances in $’s (and we want the total variance for X and Y)

Dana6 says

Hi Sir,

Is there a reason as to why we didn’t calculate the material price variance please?

Thank you.

gavilan.venter@gmail.com says

Hi John,

When doing the yield variance, in the first column, the section for actual total input at std mix why did we use quantities of what the mix should have and not the units of what the mix actually was (10133 vs 9900 and 5067 vs 5300)?

John Moffat says

Because we are looking at the effect of changing the mix separately when calculating the mix variance.

JojoBeat says

Hi John, hope you’re well.

Can there be a scenario in which the question asks more than 2 materials, let’s say 3 and in that case what do we do?

John Moffat says

Yes there can, and the ‘rules’ are exactly the same.

shakir7385 says

Dear John,

While calculating the yield variance, why we had to take the ratio of material used in mix variance. Why could we not just take the actual usage of material X and Y as defined in question?.

John Moffat says

No. We are trying to check separately the effect go changes in the mix and changes in the yield.

adhilvpd says

Thank you sir, great class. i have a doubt. Usage variance is the sum of Mix and Yield variane. If in the question its just asks us to find Usage variance, How can we find it directly without finding Mix and yield…?

thanks.

John Moffat says

By comparing the actual quantities with the standard quantities for the actual level of production, both costed at the standard cost.

However it would be unusual for a question to ask for the usage variance without asking for the analysis into the mix and the yield variances.

jatingupta@2097 says

Hello Sir!

I have done that and in question the actual usage is 15,200kgs whereas the standard usage for actual production is 15,000 kgs, and the difference of them at standard cost is coming out to be $1,600(A), but in the answer sheet it鈥檚 coming out to be $300(A). Can you please tell me what鈥檚 wrong with this?

Thanks in advance,

Jatin

John Moffat says

The actual purchases are 15,200 kg and at standard cost are $40,300.

The original budget was for 10,000 kg of X and 5,000 kg of Y, which at standard cost is $40,000.

7fsa says

Dear John,

I hope you are great Sir, thank you for your time and your informative lecture I understand your lecture lesson very well but in regards to yield variance according to my understanding its the difference between the actual output and the budgeted output so the total difference is 15200-15000=200 (A) then we can allocate this variance to X and Y it will give us the yield variance in KG then we can times those by the standard cost per kg.

It will give you the same result.

Is that right Sir,

John Moffat says

Yes, that is right. It does not matter which way you do it.

kigongo says

Sir, the lecture videos are not playing. What could be the problem?

John Moffat says

The videos are working fine.

If you are still having a problem with your computer then please ask in the Technical Problems Forum

edwin1294 says

Hi John, please can you explain why did we use std cost to cost the mix variance ?

John Moffat says

Because we are looking only at the effect of changes in the mix. The effect of changes in the price is calculated in the price variance.

Vugar says

Thank you Sir for your easy to understand lectures! I would be glad if you answer my following question. Let’s assume that our final product is Fruit Juice which is measured in litters and we use 3 type of material to produce final product. And the materials we use are measured in different unit of measure. Sugar and fruit (cherry) are in kg, but flavor enhancer is in liter. And of course adding them in different proportion rather than in standard mix will still give us final product of Juice so there is certainly mix effect there. My question is can we still use the same approach in mix calculation in this case? Thank you for your answer in advance!

John Moffat says

Yes, it would be the same approach (but is not the case in the exam 馃檪 )

mo55 says

Thanks John for breaking down your lectures to everyone’s understanding.

Please I’lld like to ask how we got the 2/3 and the 1/3 that was used to multiply the total material usage of 15200 in the mix variance.

Thanks in advance for your response.

John Moffat says

On the standard cost card printed in the lecture notes, the total input for 1 unit is 3kg of which 2 kg (i.e. 2/3) are Material X and 1 kg (i.e. 1/3) are Material Y

mo55 says

Wow! I now understand it.

Thanks again John, u are the best:)

John Moffat says

You are welcome 馃檪

haddock says

Sir, you say that when analysing the toal yield variance between the different materials, they will always both be favourable or adverse. However, in the example, the yield variance is not in the same proportions as the standard mix. Therefore, theoretically, this could provide a result where although the total yield variance is either A/F, the indivudual variances could be both A and F? How can we ignore the effect of the yield variance on the mix variance?

John Moffat says

No – the yield variances must all be favourable or must all be adverse. Given that we are using standard mix for both the actual total usage and the standard total usage it cannot possibly be otherwise. There is nothing theoretical about it! 馃檪

marblserockin says

I love your lectures, thank you so much for making it seem so easy. and for the last part too

a7mdsuliman says

Just simple enough to be easy understand, Thanks John.

I just got confused in one point in the yield variance section; why we did use 10,133kg X & 5,067kg Y rather than 9,900kg X & 5,300kg Y at the actual total input as these are actually our inputs.

I will leave it here and also will drop it in ask tutor forum.

Appreciate your advice John.

John Moffat says

We use the actual total input at standard mix, so that all we are measuring is the yield variance (the mix variance was dealt with separately).

alie2018 says

Thanks John. The difference between the mix and yield variances gives the material usage variance. The mix variance shows the effect of changing the proportion of the mix of material input and the yield shows the difference between the actual and expected yield or output.

danielmnkandu says

very helpful. thank you

John Moffat says

Thank you for your comment 馃檪

accakeisha says

Just Brilliant!!in a nutshell

John Moffat says

Thank you for your comment 馃檪