yield variance

A normal loss makes no difference at all to the rules that I go through in the lectures.

Suppose the standards for every 100 kg of a product it requires 50 kg of material A, 60 kg of material B (so total material of 110kg) but a normal loss of 10% i.e. 10 kg.

Suppose the actual production is 1,500 kg of the product, then they should have used 110 kg for every 100kg produced. So the actual total purchases should have been 110/100 x 1,500 kg = 1,650 kg in total of which 50/100 x 1500 = 682 kg should have been material A, and 60/100 x 1500 = 900 kg should have been material B.
The difference between these quantities (at standard cost) and the actual total quantity (at standard mix and standard cost) is the yield variance.

There is no relevant as to which material the loss relates.

How you show your workings is irrelevant – I do it in the way I find most logical and (more importantly) the easiest to remember.

The examiner has not asked a question with normal losses in for many years.

The last one i can remember was set my the previous examiner in June 2009 and was called Crumbly Cakes. If you can find the question, then you can find my lectures working through the answer, linked from the following page:

https://opentuition.com/acca/f5/f5-past-acca-exam-question-3-june-2009-exams/

You are welcome 🙂