Variance Analysis (1)

Question 1

Where inputs can be substituted for one another?

Answer 1

Efficiency/usage variance can be subdivided

Question 2

What happens when a product requires two or more raw materials in its make-up?

Answer 2

It is possible to sub-analyse the materials usage variance into a materials mix and a materials yield variance

Question 3

What happens when adding a greater proportion of one material?

Answer 3

Might make the materials mix cheaper or more expensive

Question 4

If more than one type of labour is used in a product?

Answer 4

Labour eficiency can be analysed further into a labout mix and a labour yield variance

Question 5

What is a mix variance?

Answer 5

Occurs when materials are not mixed or blended in standard proportions

Question 6

What is a mix variance a measurement of?

Answer 6

Ff whether actual mix is cheaper or more expensive than standard mix

Question 7

What is a yield variance?

Answer 7

Arises because there is a difference between what input should have been and the actual input

Question 8

Mix variance (financial impact)

Answer 8

The financial impact of using a different proportion of raw materials

Question 9

Yield variance (financial impact)

Answer 9

The financial impact of the input yielding a different level of output to the standard

Question 10

What does total materials variance contain?

Answer 10

Material price variance

Material usage variance

Question 11

What does material usage variance contain?

Answer 11

Mix variance

Yield variance

Question 12

What does mix variance indicate?

Answer 12

The cost of a change in the mix of materials

Question 13

What does yield variance indicate?

Answer 13

The producitivity of the manufacturing process

Question 14

What could cause the final quality of a product to change?

Answer 14

Rising raw material prices may cause pressure to change the mix of materials

Question 15

How may the production manager’s performance be measured?

Answer 15

By mix and yield variances. Quality targets may also be needed

Question 16

When does a favourable mix variance occur?

Answer 16

When ACTUAL mix of materials is cheaper than standard mix

Question 17

What may using a cheaper mix of materials may reuslt in?

Answer 17

An output-yield that is less than the standard output (e.g. a favourable mix variance may result in an adverse yield variance)

Question 18

When there is an adverse mix variance?

Answer 18

Actual mix of materials is more expensive than standard mix, there may be an interrelated favourable yield variance