« Report about Revised CMA Part 4 | Main | Submit an article »
Quantity variance is the sum of mix and yield variances
The Quantity (Efficiency or Usage) Variance is the difference between the actual material (labor) usage and the standard usage for this level of output, multiplied by standard price.
Quantity Variance = (Standard Quantity for Actual Output - Actual Output) * Standard Price, or
Quantity Variance = (SQ - AQ) * SP
When there is more than one input, we calculate Quantity (Efficiency) Variance for each input individually:
In this situation, the Quantity (Efficiency) Variance may be caused by two different factors:
1. The mix of material (labor) actually used was different from the mix that should have been used, or
2. Total quantity of the inputs actually used to produce the actual output was different from the standard quantity that should have been used to produce actual output.
Therefore, the Quantity (Efficiency) Variance can be broken down into two variances: the Mix Variance and the Yield Variance.
1. Mix Variance:
or
or
Mix Variance = (WASP - WAAP) * AQ
2. Yield Variance:
or
or
Yield Variance = (SQ - AQ) * WASP
Now, we can demonstrate that Quantity (Efficiency) Variance is equal the sum of Mix and Yield Variances:
Technorati Tags: VarianceVariance Analysis
Posted by mazoo at December 6, 2005 11:52 AM
Related posts:
Covariance and Calculation of Portfolio Variance Aug 23, 2006Simple Linear Regression Equation Part 2 Mar 21, 2005
Comments
HI.. It would be great if you do give an example... thanks
Posted by: Matthew MM at June 2, 2006 5:21 PM
Hi...add excel templets - examples free download files solving for costing matters
Thanks
Posted by: Murad Talpur at October 23, 2006 7:18 AM
Thank you very much for sending this massage
Posted by: Boonmee at January 16, 2008 11:57 AM
See this massage again
Posted by: Mr. Boonmee at January 16, 2008 12:03 PM
