Question

What is the formula for yield variance?

1) Yield variance = (Standard yield - Actual yield) x Standard cost of the yield
2) Yield variance = (Actual yield - Standard yield) x Standard cost of the yield
3) Yield variance = (Standard yield + Actual yield) x Standard cost of the yield
4) Yield variance = (Standard yield / Actual yield) x Standard cost of the yield

Answer 1

The formula for yield variance is (Actual yield - Standard yield) x Standard cost of the yield.

Step-by-step explanation:

The formula for yield variance is:

1. Yield variance = (Actual yield - Standard yield) x Standard cost of the yield

The yield variance is calculated by subtracting the standard yield from the actual yield and then multiplying it by the standard cost of the yield. This formula helps measure the difference between the expected (standard) yield and the actual yield in terms of cost.

Yield variance, a key metric in cost accounting, is calculated using the formula (Actual yield - Standard yield) multiplied by the Standard cost of the yield. This formula assesses the difference between the expected and actual output, providing insights into production efficiency and performance.

A positive yield variance implies higher actual yields than standard, potentially indicating improved productivity. Conversely, a negative variance signals underperformance.

By quantifying the deviation from standard expectations, businesses can analyze the reasons behind yield variations, facilitating informed decision-making for process improvement and cost management. This formula is integral for evaluating operational effectiveness and optimizing resource utilization in various industries.