material mix and yield variances

Question 1

what is the mix variance

Answer 1

The mix variance then how much of the overall usage variance is due purely to the proportions of the materials input into production being different to the proportions that were expected. It is based on the actual total input levels of material.

Question 2

what is the yield variance

Answer 2

The yield variance then isolates whether the actual amount of material input into production led to more or less output units than would have been expected for that level of input.

Question 3

how to calc the usage variance

Answer 3

mix variance + yield variance

Question 4

Materials mix variance formula is ?

Answer 4

(AQ x SM - AQ x AM) x std rate

Question 5

Materials yield variance formula ?

Answer 5

(SQ x SM(SQAP) - AQ x SM) x Std. rate

Question 6

what is the formula for sales mix variance

Answer 6

(AQ x AM - AQ x SM) Std. profit/cont.

Question 6

what is the Sales mix variance

Answer 6

difference between the standard mix of actual sales volume and the actual mix of actual sales volume (i.e. the actual sales volumes), valued at the standard
profit/contribution

Question 7

what are the Causes of adverse sales mix variance

Answer 7

1. A downturn in the economy, leading to customers becoming more cost conscious and preferring to purchase cheaper goods.
2. Failure of a marketing campaign to try and boost sales of the more profitable item.
3. Increased competition in the marketplace for the more profitable item.

Question 8

what is sales quantity variance

Answer 8

difference between the actual sales volume (at standard mix) and the
budgeted volume valued at the standard profit/contribution.

This measures the impact on profit resulting purely from selling more or less units than
budgeted and is unaffected by the actual mix of sales.

Question 9

how to calc sales quantity variance

Answer 9

(AQ x SM - SQ x SM(SQAP)) x Std. profit/cont.

Question 10

what are possible causes of a favorable quantity variance could be due to:

Answer 10

1. An increase in the overall market size for the company’s products
2. Good performance by the sales team in exceeding targets (possibly due to a new reward scheme being introduced)

Question 11

what is the effect on staff of finding these variances

Answer 11

1.Variances are calculated once the period has ended i.e. they are historic and thus it is too late
for the staff to do anything about them. This can be de-motivating.

2.As staff know that their
performance will be judged by the variances, they may be motivated to try to set an easy
standard or to falsify the actual results so that their variances are favorable.

3.There is a tendency to focus on adverse variances and so staff may be motivated to avoid
adverse variances rather than achieve favorable variances.