1. COMPUTE FOR THE MATERIALS MIX VARIANCE 2. COMPUTE FOR THE MATERIALS YIELD VARIANCE
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
1. COMPUTE FOR THE MATERIALS MIX VARIANCE
2. COMPUTE FOR THE MATERIALS YIELD VARIANCE
MARINA Bottlers Inc, a leading softdrinks company is producing their bottle requirements. For each case of 24 eight-ounce bottles, the company prescribed the following standard product mix: Material A @ 2.4 lb, P50/lbs; Material B @ 6 lb, P22/lbs and Material C @ 1.6 lbs, P15/lb.
During the month of August, 25,000 cases were produced from an input of:
| Material | Pounds | Cost/lb |
| A | 63,700 | P49.00 |
| B | 125,200 | 20.50 |
| C | 48,100 | 16.00 |
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