PM Walkthrough: Mix and Yield Variance Analysis — Step by Step

ExpertMinds Editorial·3 June 2026·10 min read

A fully worked ACCA PM variance analysis question covering material mix and yield variances, with a complete operating statement reconciliation from budgeted to actual profit.

Mix and yield variances are an extension of the material usage variance. They appear when a product is made from a blend of inputs (e.g., a food product, chemical, or alloy) where the proportions of each ingredient can vary. The examiner reports that candidates frequently confuse which variance to calculate first and lose the cross-check between mix + yield = usage.

Key fact:Relationship: Material price variance + Material usage variance = Total material cost variance. And: Material mix variance + Material yield variance = Material usage variance. Use this as your cross-check.

Blendco makes a chemical compound using two inputs: Chemical A and Chemical B. Standard mix: 60% Chemical A, 40% Chemical B. Standard cost: A $8/kg, B $5/kg. Standard yield: 90% (10% loss in process). Standard output per 100 kg input: 90 kg of compound. Budgeted production: 900 kg of compound. Actual results: Chemical A used 620 kg, Chemical B used 430 kg. Actual output: 940 kg of compound. Calculate the material mix variance, material yield variance, and reconcile to the total usage variance.

[12 marks]

Calculate actual total input and standard mix of that input

Total actual input = 620 kg + 430 kg = 1,050 kg. Standard mix of 1,050 kg total: A should be 60% × 1,050 = 630 kg. B should be 40% × 1,050 = 420 kg.

Step 2 — Material Mix Variance

Mix variance = (Standard mix of actual input − Actual input used) × Standard cost per kg

Chemical A: (630 − 620) × $8 = $80 Favourable (used less A than standard mix requires). Chemical B: (420 − 430) × $5 = ($50) Adverse (used more B than standard mix requires). Total mix variance = $80F − $50A = $30 Favourable.

Tip:Mix variance logic: if you use more of a cheaper ingredient than the standard mix requires, that is favourable (you saved cost per unit of input). Here, more B (cheaper at $5) and less A (dearer at $8) was used — net saving = $30F.

Step 3 — Material Yield Variance

Yield variance = (Actual yield − Standard yield from actual input) × Standard cost per kg of output

Standard yield from 1,050 kg input = 1,050 × 90% = 945 kg. Actual yield = 940 kg. Difference = 940 − 945 = 5 kg Adverse. Standard cost per kg of output: (60% × $8 + 40% × $5) / 90% = ($4.80 + $2.00) / 0.90 = $6.80 / 0.90 = $7.556/kg. Yield variance = 5 kg Adverse × $7.556 = ($37.78) Adverse.

Step 4 — Cross-Check: Mix + Yield = Usage Variance

Calculate the total usage variance independently to verify

Standard material cost for actual output: 940 kg output requires 940 / 0.90 = 1,044.4 kg input. Standard cost of that input = 1,044.4 × (60% × $8 + 40% × $5) = 1,044.4 × $6.80 = $7,102. Actual material cost = (620 × $8) + (430 × $5) = $4,960 + $2,150 = $7,110. Usage variance = $7,102 − $7,110 = ($8) Adverse. Cross-check: Mix $30F + Yield ($37.78A) = ($7.78) — rounding difference confirmed. ✓

Watch out:Yield variance trap: the standard cost per kg of OUTPUT (not input) uses the standard input cost grossed up by the expected loss. Candidates who use the standard input cost per kg instead of the output cost understate the yield variance. Always divide by the expected yield percentage.

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Mix and yield appear in most PM sittings. Build speed and cross-check confidence with full exam questions.

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