Material mix variance
The material mix variance measures the cost effect of actual input proportions differing from the standard mix for the actual total input. Recalculate that actual total in standard proportions, compare with each material’s actual quantity and value the differences at standard prices. Under favourable-positive convention, sum (revised standard quantity − actual quantity) × standard price. Consider quality and yield consequences: a cheaper mix may produce more waste or an inferior output.
Worked example
Standard mix is 60% A at $2 and 40% B at $3. Actual input totals 110 kg, split 55/55. Revised standard quantities are 66/44: A gives $22 favourable and B $33 adverse, net $11 adverse.
Common mistake
Use actual total input to construct the revised standard mix, not the input allowed for actual output.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | PM | Direct | September 2026–June 2027 |