Direct Material Mix Variance | Meaning | Formula

Direct Material Mix Variance

Direct material mix variance is a part of direct material usage variance. If only one type of material is used for production, there is no need of calculating is used for production, there is no need of calculating direct material mix variance. Whenever two or more types of materials are used for production, direct material mix variance should be calculated.

According to I.C.M.A., London,

“that portion of the direct materials usage variance which is due to the difference between the standard and actual composition of a mixture”.

The material mix variance arise as a result of changes in the ratio of material mixture used, compared to the standard fixed for the purpose.

Formula to calculate Direct Material Mix Variance

The following formula is used to calculate Direct Material Mix Variance.

MMV = SP(RSQ — AQ)

Where,

  • MMV = Material Mix Variance
  • SP = Standard Price
  • RSQ = Revised Standard Quantity
  • AQ = Actual Quantity

The following formula is used to calculate Revised Standard Quantity

i.e.,

RSQ = (SQ of each material / Total SQ) x Total AQ

If the revised standard quantity is more than the actual quantity, the variance will be favorable, and on the other hand, if revised standard quantity is less than the actual quantity, the variance will be unfavorable or adverse.

The direct material mix variance is calculated under two situations

  1. When actual quantity of mix is equal to standard quantity of mix.
  2. When actual quantity of mix is more or less than the standard quantity of

Leave a Reply




Recent Posts


Related pages


disadvantage of personal sellingprofitability ratios calculation formulas and explanationsfranchising meaningadvantages and disadvantages of internet shoppingdefine mbocooperative company advantages and disadvantagestargetcostingmeaning of qualification shareswhat is cluster sampling methodorganizational structure of an advertising agencyfeatures of absorption costingdirect exporting advantages and disadvantagesinterpretation of gross profit ratiovertical mergers definitiondirect quote and indirect quote foreign exchangemerge hindi meaningdefine dumping economicswhat is the meaning of autocraticpreference shares advantages and disadvantageswhat is autocratic leadershipdefine demeritsconsumer durable definitioncentralized and decentralized decision makingcumulative redeemable preference sharesexplain sole tradervariance analysis managerial accountingmarket capitalist economy definitionwhat is a consumer cooperativewhat is non bank financial intermediariesdefine impersonabledemerits of mixed economydifference between shares and debentures and bondsbudgetary control techniquescalculate gearing ratio from balance sheetmaker of promissory noteadvantages and disadvantages of being a franchiseauthoritarian management stylefive characteristics of capitalismsebi rulesstaff morale questionnaire samplesundry creditor definitionconsumer patronagemeaning of profitability ratiosaverage inventory periodvertical merger examplescentralized business structurenegotiable instruments in business lawcharacteristics of managerial accountingsole trading concern informationconcept of ultra virescapital budgeting advantages and disadvantagessecuritisation definitionbailment formurbanization of indiauses of elasticity of demand for managerial decision makingadvantages of participative leadership styleanand rathi wikipediadebtors velocitythe formula for the labor price variance isstock audit processuncertain meaning in telugumanagerial accounting is preparedsecuritization in bankingsalesman traitsjob and process costingmeaning of skimming pricingpromisor meaningstock turnover period formulaadvantages of periodic stock takingwhat is bond and debenturebill discountingdefinition of mercantile lawwhat is payback period formulatrade payables turnover ratiosebi rulesadvantages and disadvantages of formal and informal communicationdeliberate samplingadvantage and disadvantage of a sole trader