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Material mix variance will occur when the actual mix of materials which is expensive used in production is different from the standard mix. So it is inputs which are being considered.
Material yield variance arises because the output which was achieved is different from the output which would have been expected from the inputs. So it is outputs which are being considered.
Sales mix contribution variance measures the effect on profit of changing the mix of actual sales from the standard mix.
Sales quantity contribution variance measures the effect on profit of selling a different total quantity from the budgeted total quantity.
You have not asked a question 🙂
I assume you are wanting me to check whether what you have written is correct. If so, then yes – it is correct.
Have you watched my free lectures on both of these? The lectures are a complete free course for Paper PM and cover everything needed to be able to pass the exam well.
Yes, I watched your video. Thanks for the previous answer though I needed to ask you one more query. Although it is also a lengthy one (sorry for that :)).
In Mix variance the material kgs would be same in total whether we have use more of one material and less of the other material would cause a variance because we are producing same total number of kgs.
[Material mix simply account for input of Kgs in the production process]
However, in Yield variance the material kgs would not be same in total because the actual kgs produced might be more or less than standard/bugeted kgs which might be a result of more output in case we have more actual kgs produced and loss/wastage in case we have less actual kgs produced.
[Material yield simply account for output of Kgs in the production process]
Sales mix variance measures the effect on profit of changing the mix of actual sales from the standard mix. It refers to whether we have sold more units in actual than units budgeted and vice versa.
If sales mix variance is favourable then we sell more units in actual as compared to the budgeted units sold;
If sales mix variance is adverse then we sell less units in actual as compared to the budgeted units sold;[Sales mix simply account for actual input of Kgs in the production process]
Sales quantity variance measures the effect on profit/contribution of selling a different total quantity from the budgeted total quantity. It refers to whether we have so more units in actual than units budgeted and vice versa.
If sales quantity variance is favourable then we sell more units in actual as compared to the budgeted units sold
If sales quantity variance is adverse then we sell less units in actual as compared to the budgeted units sold[Sales quantity simply account for actual output of Kgs in the production process]
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