Measuring Yield, Mix And Quanitty Effects

Question 1

Objective

Answer 1

Understanding variance analysis for inputs in manufacturing organisations

Question 2

Input variance

Non-substitutable

Answer 2

Materials that are essential characteristic of the final product

Question 3

Input variance

Substitutable

Answer 3

Materials that it’s proportions can vary in the product but this variation will not affect the characteristic of the final produce

Question 4

Yield and mix

Answer 4

Mix refers to the relative proportion or combination of different inputs used within an input category such as direct material or direct manufacturing labour to produce a quantity of finished outputs.

Yield refers to the quantity of finished output units produced from a budgeted or standard mix of inputs within an input category.

Question 5

Managers can read off between

Answer 5

Price and efficiency variances.

Trade-offs can happen with yields and mix of material as well as labour.

Question 6

Flexible-budget variance

Answer 6

(Actual costs - Flexible budget)

Question 7

Price variance

Answer 7

Actual costs - (actual input x budgeted prices)

Question 8

Efficiency variance

Answer 8

(Actual input x budgeted prices) - Flexible budget

Question 9

Flexible budget

Answer 9

Budgeted inputs for actual outputs achieved x budgeted prices

Question 10

Direct manufacturing Labour and mix variances potential reasons are

Answer 10

Shortage of Labour 
Absenteeism - people staying away from work without probable cause
Turnover 
Processing problems 
Change in the Labour mix

Question 11

Revenue and sales variances

Answer 11

Revenue variances involves companies mix of products and services.
Also called sales variance because sales is the largest part of the revenue of many companies