Changing Material Mix

NotesQuizPaper examCBE

Change in Mix

The materials mix variance indicates the cost of a change in the mix of materials and the yield variance indicates the productivity of the manufacturing process. A change in the mix can have wider implications.

For example, rising raw material prices may cause pressure to change the mix of materials. Even if the yield is not affected by the change in the mix, the quality of the final product may change. This can have an adverse effect on sales if customers do not accept the change in quality.

The production manager’s performance may be measured by mix and yield variances but these performance measures may fail to indicate problems with falling quality and the impact on other areas of the business. Quality targets may also be needed.

NotesQuizPaper examCBE