- This topic has 3 replies, 2 voices, and was last updated 8 months ago by
John Moffat.
John Moffat.-
Posts
-
Syed Ahsan Ali
- Topics: 107
- Replies: 66
- ☆☆
There is a method called ‘Total method’ that we use when calculating material yield variance where we take total units produced to calculate yield variance unlike what we usually do is to take kgs of each product for calculation purposes and take out their proportions and so on.
I find this approach easy to handle but I have few confusions about it (you also talked about this approach but didn’t explain it in your lecture).
Is it correct that this approach is only for material yield variance and we can’t use this for material mix variance?
John Moffat
- Topics: 57
- Replies: 49628
- ☆☆☆☆☆
It is only for the yield variance, which is why I prefer the approach in the lecture which obviously gives the same result 🙂
Syed Ahsan Ali
- Topics: 107
- Replies: 66
- ☆☆
This is the approach I was talking about which give different answer than the approach you do in the lecture (which u said was adopted by examiner)
[Question]
A company manufacturers a chemical using two components, A and B.
The standard information for one unit of the chemical are as follows:Material A (10 Kg at $4 per Kg) = $40
Material B (20 Kg at $6 per Kg) = $120
Total————————————$160In a particular period 160 units of the chemical were produced using 1000 kgs of material A and 1460 kgs of material B
Required:
Calculate the material yield variance.[Answer]
Actual Output in Units——————————-160
Standard Output from Actual Input in Units————82
Difference——————————————–78 (F)
Standard cost of material per unit——————–$160
Variance———————————————-$12,480 (F)Standard Output from Actual Input is calculated:
Standard units = (Total Actual Kgs / Total Std Kgs per unit)
Standard units = (2460 Kgs / 30 Kgs per unit) = 82Is that all correct?
John Moffat
- Topics: 57
- Replies: 49628
- ☆☆☆☆☆
$12,480 is the correct answer and is the figure you arrive at whichever way you do it.
I never say in my lectures for mix and yield variances that my way is ‘the way adopted by the examiner’. There is only one correct answer and it does not matter how you show your workings.
(It is for planning and operational variances that there are two different methods which are both acceptable, but which give different answers. For that I do state that the method in my lectures is the method that the examiner prefers (and is the easier method).)
John Moffat- You must be logged in to reply to this topic.