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Advanced variance analysis
1.3 The weighted average method
This is an alternative way to calculate the mix variance. It gives the same total
variance but the variance for each product is different.
The standard price in the original calculation is replaced with a new value =
standard price – weighted average price
The weighted average
standard price = (A’s % of
input × A’s standard price) +
(B’s % of input × B’s standard
price)
Material Standard Actual Difference Stnd price – Variance
mix mix WA price
A X X X X X
B X X X X X
X X X
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