Understand the Mix & Yield Variance:

Understand the Mix & Yield Variance:

                Mix and Yield variances are the two different important terms of cost accounting and mostly used by the production department, managerial accountants. The definitions and explanation of both mix and yield variances are as follows:

Mix Variance:

                That is the difference between budgeted amounts and the actual amounts. Management Accountants of the businesses use their profit margin to compare the profitability of different products. The profit margin is the net income after over total sales.

Mix Variance = Actual Quantity x   (Actual Variance% - Standard Variance %) x Standard Price.

                      

                       =                                         AQ x (A% - S %) x SP

Yield Variance:

                Yield variance is mostly known as the unfavorable variance that means the actual output is less than the standard cost. That is the difference between the actually achieved output and the standard output of a production process. That is based on the standard inputs of materials and labor. The standard cost must be valued for yield variance.

Yield Variance =                (Standard Quantity x Standard Margin % x Standard Price)

                                                                                ­_

                                                (Actual Quantity x Actual Margin % x Standard Price)

                                =                           (SQ x S% x SP) – (AQ x A% x SP)

Being a managerial accountant of a production or manufacturing department always remember that the quantity variance for material always is used for mix variance and the production variance for efficiency always be used for yield variance.