ACCA F5考試知識點講解

Some tips to help alleviate students' fears of variance analysis

Since long ago, variance analysis has been an area that evokes fear in students worldwide. Students enter the exam hall, desperately running through the formulae used to calculate all the different variances, fearful of forgetting them before they have managed to put pen to paper. Then the inevitable happens: they turn over the exam paper and a variance question stares back at them. Frantically, they scribble down all the formulae before they are lost forever. Alas, they can’t remember it quite accurately enough. Is it actual quantity x standard price or standard quantity x actual price? Panic grips them. Logic flies out of the window. They move desperately on to the next question.

Does this sound like a familiar story to you? If it does, carry on reading. This article might help you. Many articles have been written about variance analysis over the years, but the purpose of this one is to cover the area of calculating materials mix and yield variances.

Material usage variance Most students have relatively little difficulty in calculating a straightforward material usage variance. As a reminder, let’s recap on what the material usage variance is and how it is calculated. The material usage variance analyses the difference between how much actual material we used for our production relative to how much we expected to use, based on standard usage levels. So, for example, if we made 5,000 items using 11,000kg of material A and our standard material usage is only 2kg per item, then we clearly used 1,000kg of material more than we expected to (11,000kg – [2 kg x 5,000 items]). In terms of how we value this difference, it must be at standard cost. Any difference between standard and actual cost would be dealt with by the material price variance.

There can be many reasons for an adverse material usage variance. It may be that inferior quality material have been purchased, perhaps at a lower price. This may be reflected in a favourable material price variance: the materials were cheaper but as a result there was perhaps more waste.

On the other hand, it may be that changes to the production process have been made, or that increased quality controls have been introduced, resulting in more items being rejected. Whatever the cause, it can only be investigated after separate material usage variances have been calculated for each type of material used and then allocated to a responsibility centre.

Further variance analysis where several materials are used The fact that most products will be comprised of several, or sometimes hundreds of different materials, leads us back to the more detailed materials mix and yield variances that can be calculated in these instances. In many industries, particularly where the product being made undergoes a chemical process, it may be possible to combine different levels of the component materials to make the same product. This, in turn, may result in differing yields, dependent on the mix of materials that has been used. Note, when we talk about the materials ‘mix’ we are referring to the quantity of each material that is used to make our product ie we are referring to our inputs. When we talk about ‘yield’, on the other hand, we are talking about how much of our product is produced, ie our output.