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Why does a favourable mix variance give an adverse yield variance and vice versa?
When there is a favourable mix variance, it means that more of the cheaper materials are being used and less of the expensive ones. This cost-saving measure may result in poorer quality output, leading to more waste and ultimately an adverse yield variance.
On the other hand, an adverse mix variance occurs when more of the expensive materials are used and less of the cheaper ones. This could potentially improve the quality of the product, reduce waste, and result in a favourable yield variance.
The relationship between mix variance and yield variance depends on the specific materials used and their impact on the production process.
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