![]() It may be possible for the production manager to deviate from this standard mix and use slightly different proportions of each input material. From this it can be seen that the more Beta used, the more expensive the final product will be. The standard cost per kg of Alpha is $2, of Beta is $5 and of Gamma is $1. You are also given the standard costs of each input material. The standard proportions of the input materials is 40/120 of Alpha, 60/120 of Beta and 20/120 of Gamma for each 100kg of Omega. You have been given the standard mix of inputs. The material variances that can be calculated are therefore:Ĭalculate the material mix and yield variances and use these to discuss the performance of Kappa Co. This, in turn, may result in differing yields, depending on the mix of materials that has been used. In many production processes, it may be possible to combine different levels (use a different mix) of the input materials to make the same product. When we talk about ‘yield’, on the other hand, we are talking about how much of our product is produced – ie our output. When we talk about the materials ‘mix’ we are referring to the quantity of each material that is used to make our product – ie we are referring to our inputs. When there is more than one input material, the material usage variance can be split into material mix and yield variances. This variance demonstrates if more or less material is used than expected. Recapping previous studies, the material usage variance is calculated as the difference between the actual material used for the production level achieved compared to the amount that was expected to be used, based on standard usage levels, valued at standard cost. In PM, more advanced variances are introduced. Standard costing and basic variance calculations should be familiar from earlier studies. This article addresses the learning outcomes from Performance Management (PM) syllabus area D: Material mix and yield variances and Analyse and evaluate past performance using the results of variance analysis. An introduction to professional insights.Virtual classroom support for learning partners.Becoming an ACCA Approved Learning Partner. ![]()
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