Question

Which of the following is the correct formula to calculate yield variance?

a.Yield variance = (Total actual input quantity − Standard input allowed) × Actual cost of the yield
b.Yield variance = (Standard yield − Actual yield) × Standard cost of the yield
c.Yield variance = Actual yield − Standard input allowed
d.Yield variance = Standard input allowed − Standard yield

Answer 1

Yield variance is calculated using the formula: Yield variance = (Standard yield − Actual yield) × Standard cost of the yield. It assesses the difference between the actual and standard yields, factoring in the standard cost.

Step-by-step explanation:

The correct formula to calculate yield variance is option b: Yield variance = (Standard yield − Actual yield) × Standard cost of the yield. Yield variance is a measure used in manufacturing and production to determine the difference between the actual yield and the standard yield, multiplied by the standard cost per unit.

When calculating yield variance, the standard yield refers to the amount of product that should be produced under ideal conditions, while the actual yield is the amount of product actually produced. The difference between these two yields, when multiplied by the standard cost per unit, gives the yield variance, which is an important figure in cost accounting and production management.