Page 280 - PM Integrated Workbook 2018-19
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Chapter 10
6.3 Yield variances
A yield variance measures the efficiency of turning the inputs into
outputs. If the yield variance is adverse, it suggests that actual output is
lower than the expected output.
This could be due to labour inefficiencies, higher waste, inferior materials, or using a
cheaper mix with a lower yield.
Method 1: The ‘total’ method
Actual yield (output) X units
Expected outputs from actual input Y units
––––––––
Difference X – Y units
@ standard material cost per unit of output $
––––––––
Variance (X – Y) × $
––––––––
Method 2: The ‘individual’ method
Material Actual Quantity, Standard Difference @ Standard Variance
Standard Mix Quantity, price
(AQSM) Standard Mix
(SQSM)
M1 A kgs D kgs D – A $x/kg $Var
(F/A)
M2 B kgs E kgs E – B $x/kg $Var
(F/A)
M3 C kgs F kgs F – C $x/kg $Var
(F/A)
$Total
yield
(F/A)
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