Budgeting & Forecasting › Variance Analysis

What is the materials mix and yield variance?

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Answer

When several materials can be substituted, the usage variance splits into a mix variance—the effect of using a different proportion (mix) of materials than standard—and a yield variance—the effect of getting more or less total output from the total input than standard. They analyze efficiency where inputs are interchangeable (e.g., food, chemicals).
Mix: (actual mix - standard mix) at std prices.
Yield: (actual yield - standard yield) x std cost.
Real-world example A cheaper mix of ingredients gives a favorable mix variance but may worsen the yield.

Common follow-ups: When are mix and yield relevant? | What does the yield variance measure?