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ACCA F5
Performance Management (PM)
业绩管理
ACCA Lecturer Kimberley Gong
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1
2
Material mix and yield variances
Sales mix and quantity variances
Content of chapter 16
3 Planning and operational variances
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Further variance analysis
Material mix and yield variances
Materials
Total variance
Price variance Usage variance
Mix variance Yield variance
• A product contains more
than one type of material
and they are interchangeable.
•A mix variance is used to
monitor the difference
proportion of raw material.
•A yield variance is used to
monitor the effect of input
on the different level of
output to the standard.
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Further variance analysis
Material mix and yield variances
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Further variance analysis
Material mix and yield variances
Interpretations of material mix and yield
variances
Mix variance –an adverse total mix variance would
suggest that a higher proportion of an expensive
material is being used.
Yield variance –an adverse total yield variance
would suggest that less output has been achieved
for a given input. The total input in volume is more
than expected for the output
achieved.(Unproductively)
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Lecture example 1
A company manufactures a type of chemical
product, using two components Flash and Bang.
The standard materials usage and cost of one unit
of the product are as follows:
In a particular period, 80 units of the product were
produced from 600kg of Flash and 750kg of Bang.
Required: Calculate the materials usage, mix and
yield variances.
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Lecture example 1
Materials usage
Std.
Usage
Actual
usage
Variance Std.
cost/kg
Total
variance
Flash 5X80=400 600 200(A) $2 400(A)
Bang 800 750 50(F) $3 150(F)
250(A)
Actual Qty
Std. Mix
Actual Qty
Actual Mix
Variance Std. cost/kg Total
variance
Flash 450 600 150(A) $2 300(A)
Bang 900 750 150(F) $3 450(F)
1350 150(F)
Material Mix Variance
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Lecture example 1
Std. Qty
Std. Mix
Actual Qty
Actual Mix
Variance Std. cost/kg Total
variance
Flash 400 450 50(A) $2 100(A)
Bang 800 900 100(A) $3 300(A)
400(A)
Material Yield Variance
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Further variance analysis
Sales mix and quantity variances
Sales
Total variance
Price variance Volume variance
Mix variance Quantity variance
Sales mix variance
It indicates the effect on
changing the proportion of
the various products sold is
different from those in the
budget.
Sales quantity variance
It indicates the effect on
selling a different total
quantity from the budgeted
total quantity.
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Further variance analysis
Sales mix and quantity variances
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Further variance analysis
Sales mix and quantity variances
Interpretations of sales mix and quantity
variances
–Sales mix variance
It indicates the effect on changing the proportion of
the various products sold is different from those in
the budget.
–Sales quantity variance
It indicates the effect on selling a different total
quantity from the budgeted total quantity
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Lecture example 2
Just Desserts Limited makes and sells two products,
Chocolate Crunch and Strawberry Sundae. The budgeted
sales and profit are as follows.
Actual sales were 280 units of Chocolate Crunch and 630
units of Strawberry Sundae. The company management is
able to control the relative sales of each product through
the allocation of sales effort , advertising and sales
promotion expenses.
Required
Calculate the sales volume variance, the sales mix
variance and the sales quantity variance.
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Lecture example 2
Actual Qty
Std. Mix
Actual Qty
Actual Mix
Variance Std. cost/kg Total
variance
CC 520 280 240(A) $5 1200(A)
SS 390 630 240(F) $3 720(F)
910 480(A)
Budgeted
sales
Actual
sales
Difference Std.
profit/uni
t
Total
variance
CC 400 280 120(A) $5 600(A)
SS 300 630 330(F) $3 990(F)
390(F)
Sales Volume Variance
Sales Mix Variance
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Lecture example 2
Std. Qty
Std. Mix
Actual Qty
Actual Mix
Variance Std. cost/kg Total
variance
CC 400 520 120(F) $5 600(F)
SS 300 390 90(F) $3 270(F)
870(F)
Sales Quantity Variance
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Further variance analysis
Planning and operational variances
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Further variance analysis
Planning and operational variances
Planning and operational variances for sales
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Lecture example 3
KSO budgeted to sell 10,000 units of a new product
during 20X0. The budgeted sales price was $10 per
unit, and the variable cost $3 per unit.
Actual sales in 20x0 were 12,000 units and variable
costs of sales were $30,000, but sales revenue was
only $5 per unit. With the benefit of hindsight, it is
realised that the budgeted sales price of $10 per
unit was hopelessly optimistic, and a price of $
per unit would have been much more realistic.
Required: Calculate planning and operational
variances for sales price
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Lecture example 3
Planning
$/unit
Original selling price 10
Revised budget selling price
Total sales price planning variance = 66000(A)
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Lecture example 3
Operational
$/unit
Actual price 5
Revised price
Variance (F)
Total sales price operational variance = 6000(F)
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Further variance analysis
Planning and operational variances for materials
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Lecture example 4
The standard materials cost of a product is
5kgs×$ per kg = $. Actual production of
10,000 units used 54,400 kgs at a cost of $410,000.
In retrospect it was realised that the standard
materials cost should have been kgs per unit at
a cost of $8 per kg.
Required
Calculate the materials planning variances in as
much detail as possible.
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Lecture example 4
Materials price planning variance
—54400X（8 – ） = 27200(A)
Materials price operational variance
—54400 X 8 – 410,000 = 25200(F)
Materials usage planning variance
—10000X( - 5)X = 2500(A)
Materials price operational variance
—(54400 – ) = 10500(A)
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Further variance analysis
Planning and operational variances for labour
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Further variance analysis
Labour planning variances and the learning curve
a. Establish an original labor cost per unit, even
though a learning effect exists
b. Revise the standard by learning curve formula at
the end of the budget period
c. Calculate planning and operational variances for
labor. Note the labour efficiency planning variance
will always be favourable
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Further variance analysis
Advantage Limitation
Highlight controllable and non-
controllable costs
Difficulty in setting realistic
standards
Motivate managers as they will
not be accountable for poor
plannings set
Employees may excuse operational
problems as poor planning
More realistic and fair
reflection of actual performance
Time consuming
Budgets should not be revised
for operational issues
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