Yield variance

Because we are separating out the effect of changes in the mix and changes in the yield. When calculating the mix variance we have calculated the effect of changing the mix from standard, and therefore when calculating the yield variance we assume that the mix was not a problem and that we had used standard mix. Also appreciate that calculating the mix variance and the yield variance is analysing the usage variance (which as always is the difference between the actual usage and the standard usage for the actual production, both costed at standard cost). We therefore need to consider the two aspects separately.

That helped, thank you. 1 last question… question in PM ACCA article (title – material mix and yield variance) Important parts extracted from the article - 8 litres of A and 12 litres of B will yield 19 litres of C. Suppose 1850 kg of C is produced, using a total of 900 kg of material A and 1100 kg of material B (2000 kg in total). The actual cost of material A and B were at the standard cost of $20 and $25 per kg respectively. Loss rate of 5%. Not sure on how to calculate the yield variance. The answer is $1200 (A), whereas I get $1219 (A) My working Actual total input @std mix Material A 800 kg * $20 = $16000 Material B 1200 kg * 25 = $30000 Total 2000 kg - $46000 Std total input at std mix for actual output If output was 1850 kg, then the input must have been 1947 kg (1850 * 100/95). Material A and B (of 778.8 and 1168.2) proportioned according to the standard mix Material A - 778.8 kg * $20 = $15576 Material B – 1168.2 kg * $25 = $29205 Total = 1947kg - $44781 Yield variance = $44781 - $46000 = $1219 (A)

The difference is simply due to roundings. The answer in the technical article has rounded the standard materials to 779kgs of A and 1168kgs of B (instead of 778.8 and 1168.2 kgs). Your answer is more accurate, but there will not be a problem with roundings in the exam.