mix and yield variances

Hello Zulius, how’re you doing?

I would appreciate if you pick a specific question from the kit, it’d be more easier for others to help.
So any specific question? 🙂

I am guessing that you mean that on the standard cost card it is expected that some of the materials will be lost.
(for example – there is standard input of 50kg, a standard loss of 20%, and standard output of 40kg)

For the expenditure variances, compare actual costs and standard costs for the actual purchases (for this the loss is irrelevant).

For mix variances compare standard mix for the actual usage (i.e. before any loss) with actual mix for the actual usage. Cost out at standard cost.
(Again any loss is irrelevant – you are looking at the actual usage before any losses).

For yield variance, compare actual total usage (before loss), with standard total usage for the actual production. Cost out using standard mix and standard cost.

So…..suppose you had the cost card showing total usage of 50kg, loss of 10kg, and standard production 40kg.
Suppose actual total usage was 26000kg for production of 20000kg.
To produce 20000kg, you should have used 20000 x 50/40 = 25000kg.
So you have a yield variance (in kilos) of 1000kg (26000 – 25000) adverse.
Obviously you need to cost it in $’s. You use standard mix and standard cost to cost out both the actual usage (26000kg) and the standard usage (25000kg)

Hope that makes sense!

@ sohaibsk0314

Take a look at the link below, I’ve constructed a step by step guide for an example question. Hope it is clear enough for you

https://opentuition.com/wp-content/uploads/group-documents/9/1272587343-F5-MixYieldVariances.pdf