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Material Mix and Yield Variance

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › Material Mix and Yield Variance

  • This topic has 5 replies, 3 voices, and was last updated 3 years ago by John Moffat.
Viewing 6 posts - 1 through 6 (of 6 total)
  • Author
    Posts
  • November 25, 2014 at 6:52 pm #213204
    Kyaw
    Member
    • Topics: 31
    • Replies: 37
    • ☆☆

    The following question is from BPP Mock Exam 1.
    The following cost information relates to product XY, which is produced in a continuous process from several different materials.
    …………………………………………………………………………………………………….$
    Actual quantity of materials at standard price………………………………..19960
    Actual quantity of materials at actual price…………………………………….23120
    Actual yield at standard materials cost………………………………………….20800
    Standard yield from actual input of materials at standard cost………..19552

    What is the materials yield variance for the period?
    A) $ 1248(F)
    B) $ 2320(A)
    C) $ 840(F)
    D) $ 3568(F)

    This is their explanation and answer.
    Correct Answer C

    Standard yield from actual input of materials at standard cost ……….$19552
    Actual yield at standard materials cost …………………………………………$20800

    Mix Variance (195520 – 20800) : $1248(F). There are typing errors.

    I know that “Standard yield from actual input of materials at standard cost” means “actual total input in standard mix at standard cost” but I don’t understand “Actual yield at standard materials cost ”
    Does it mean “standard input in standard mix at standard cost” Please, help me.

    November 26, 2014 at 9:59 am #213345
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54680
    • ☆☆☆☆☆

    Yes. For example, suppose the standard cost card had an input of 100kg, waste of 10kg, and therefore standard output of 90kg.

    Then if the actual output (yield) was 1800 kg, it would mean that the standard input would be 1800 x 100/90 = 2,000 kg.

    The actual yield at standard cost would be the cost of standard input (2000 kg) at standard mix and standard cost.

    I hope that makes sense. BPP’s way of describing it is a bit confusing 🙂

    November 26, 2014 at 10:12 am #213351
    Kyaw
    Member
    • Topics: 31
    • Replies: 37
    • ☆☆

    Thank you very much, Sir!

    November 26, 2014 at 11:14 am #213400
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54680
    • ☆☆☆☆☆

    You are welcome 🙂

    January 15, 2022 at 8:52 am #646092
    abror
    Participant
    • Topics: 0
    • Replies: 1
    • ☆

    Standard yield from actual input of materials at standard cost ……….$19552
    Actual yield at standard materials cost …………………………………………$20800

    Sir, why the difference between them should be favourable? Because actual yield is more than standard, that is why I am thinking it is adverse.
    Can you explain it deeply please?

    January 15, 2022 at 9:14 am #646096
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54680
    • ☆☆☆☆☆

    They are producing more units than they would have expected to produce for the same cost of material being used. Therefore the cost per unit is effectively lower than they expected which will mean more profit – therefore favourable.

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