- October 23, 2021 at 2:58 pm #638910Syed Ahsan AliMember
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Mix variance is where the mixture of materials to produce one unit of a product is changed due to some reason. One material is costly and the other material is cost reasonably and using more costly material in the production is causing a variance.
if Material A is used more and less costly than Material B then using less costly material will cause company less to spent which would result in favourable variance.
But if Material A is used more and more costly than Material B then using more costly material will cause company more to spent which would result in an adverse variance.
Yield variance is where the output of material is different than the standard/budgeted output due to wastage/loss output in production.
If Actual output is more than Standard/Budgeted output then we have done well because we have produced more and it would result in favourable variance.
But if the actual output is less than Standard/Budgeted output then we have done bad because we have produced less and it would result in adverse variance.
Mix and Yield variance definition (as above) will remain the same in Material and Sales variances
Is that correct?October 23, 2021 at 4:51 pm #638923John MoffatKeymaster
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Yes it is correct (but I don’t understand why you keep typing out what I say in my lectures 🙂 )
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