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Somebody ask you this earlier but I don’t understand it. Please explain these points related to chapter 14 (example 3).
1) In both material mix and sales mix:
The material mix and sales mix variances identify the number of material kilos used by which the actual proportion differs from the standard mix in the production.It is the material kilos input that we consider in mix variance that are used to produce the output units. We use 15200 kilos of material to produce the actual output.
Total quantity of material kilos input in the production in actual quantity and standard quantity is the same (ie 15200 kilos) but I do not know why the total quantity of kilos remains the same in both of them (please explain?)
2) In both material yield and sales quantity
The yield or quantity variances identify the amount of output that is achieved is differs from the standard output that we have expected from the input kg of material.It is the actual production output that we consider in yield (or quantity) variance that are produced from the material kilos input in the production. We input 15200 kilos in actual and 15000 kilos in standard to produce our actual output (ie units).
Total quantity of material kilos output from the production in actual quantity is and standard quantity is different (ie 15200 in actual but 15000 in standard) but I do not know why the total quantity of kilos is different?
3) In mix variance, we actually see that how many material kilos are input in the production to produce the actual output (ie production units) and we need to see whether we have used more or less of the kilos to produce output.
In yield (or quantity) variance, we actually see that how many units (ie output) are achieved from the material input and we need to see whether we have produced more or less of the actual outputs than standard outputs.
All my points are correct?
Thank you very much.
Have you watched my free lectures working through this example, because I do explain in the lecture everything that you are stating.
(There is obviously no point at all in using the lecture notes if you are not watching the lectures)
Sir, I have watched your lecture on that topic but I couldn’t understand this. That led me to ask you.
Could you please explain this to me?
1) We use the same total because we are looking only at the effect of changing the mix between the two.
2) The total quantity is different from what it should be because we must have wasted or lost some of the material. That is what the yield variance is looking at.
I think it would help you to watch the lecture again.
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