How to Calculate Material Mix Variance
>> June 13, 2011
For explaining the steps of calculating material mix variance, we are taking following examples:
1. When there is no difference between actual and standard weight of material:
Calculate Material Mix Variance. Following information are given:
Both Material A and Material B's Standard weight and actual weight is 300 units.
Due to shortage of material A, it was decided to reduce the consumption of A by 15% and increase that of material B by 30%.
Material Mix Variance (Formula) = Standard Unit Cost ( Revised Standard Quantity - Actual Quantity)
Important Steps : For calculating of material mix variance, we need to calculate revised standard quantity
Revised standard Quantity of A material = Actual Quantity of A - % of reduction
= 200 units - 200 X 15% = 170 Units
Revised Standard Quantity of B Material = Actual Quantity of B + % of Increase
= 100 units + 100 X 30% = 130 units
Material Mix Variance of A Material = $ 12 ( 170 - 160 ) = $ 120 ( Favourable because actual quantity is less than revised standard quantity)
Material Mix Variance of B Material = $ 10 ( 130 - 140 ) = $ 100 ( Unfavourable because actual is more than revised standard quantity)
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Total of Material Mix Variance = = $ 20 ( Favourable)
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2. When Both Actual and standard weight of materials are different :
From the data given below, calculate the material mix variance
1. When there is no difference between actual and standard weight of material:
Calculate Material Mix Variance. Following information are given:
| Materials | Standard | Actual |
| A | 200 units @ $ 12 | 160 units @ $ 13 |
| B | 100 units @ $ 10 | 140 Units @ $ 10 |
Both Material A and Material B's Standard weight and actual weight is 300 units.
Due to shortage of material A, it was decided to reduce the consumption of A by 15% and increase that of material B by 30%.
Material Mix Variance (Formula) = Standard Unit Cost ( Revised Standard Quantity - Actual Quantity)
Important Steps : For calculating of material mix variance, we need to calculate revised standard quantity
Revised standard Quantity of A material = Actual Quantity of A - % of reduction
= 200 units - 200 X 15% = 170 Units
Revised Standard Quantity of B Material = Actual Quantity of B + % of Increase
= 100 units + 100 X 30% = 130 units
Material Mix Variance of A Material = $ 12 ( 170 - 160 ) = $ 120 ( Favourable because actual quantity is less than revised standard quantity)
Material Mix Variance of B Material = $ 10 ( 130 - 140 ) = $ 100 ( Unfavourable because actual is more than revised standard quantity)
--------------------------------------------------------------------------------
Total of Material Mix Variance = = $ 20 ( Favourable)
======================================================
2. When Both Actual and standard weight of materials are different :
From the data given below, calculate the material mix variance
Standard weight of material A and b is 100 which is different from actual weight of material A and B which is 110 units.
Material Mix Variance ( Formula) = { Total weight of actual mix/ total weight of standard mix ) X Standard cost of standard mix } - Standard cost of actual mix
Important steps : First, calculate
Total weight of actual mix = 50 units of A material + 60 units of B material = 110 units
Total weight of standard mix = 40 units of A material + 60 units of B material = 100 units
Put the value in the formula
MMV = { 110/100 X ( 40 units X $ 50 + 60 units X $ 40 ) } - ( $ 50 X 50 units + $ 40 X 60 units )
$ 4840 -$ 4900 = $ 60 Unfavourable
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