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- This topic has 3 replies, 2 voices, and was last updated 2 years ago by John Moffat.
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- August 24, 2021 at 9:43 pm #632801
Which two of the following statements are true?
1. The sales mix variance would not give useful information to the management of Fort Co if the Cracker was a van.
2. The sales mix variance will not be affected if the labour efficiency on the Drastic production line increases, all other factors remaining the same.
3. The market share variance is a planning variance, not an operational variance.
4. If the mix variance was calculated as a physical quantity, the answer would always be zero.The answer for the above question is 1 and 4.
Dear sir,
I did not understand the 4th statement
Can you pls explain why it is true and what is the statement trying to explain
Thank youAugust 25, 2021 at 9:05 am #632841I make this very point in my free lectures on mix and yield variances!!!
Suppose the actual mix was 80kg of material A and 70kg of material B.
Suppose the standard mix had been to use an equal quantity of each material. So for a total of 150kg it should have been 75kg of A and 75kg of B.
Automatically, using more kgs of one material means using fewer kgs of the other material. One has a favourable variance of 5kg and the other has an adverse variance of 5kg, and the total of the two must always be zero.
August 26, 2021 at 10:50 pm #633084Got it sir..Thanks a lot!
August 27, 2021 at 7:22 am #633107You are welcome 🙂
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