Production yield variance

Product yield variance is the difference between the actual and budgeted proportions of product resulting from a production process, multiplied by the standard unit cost. The variance measures the efficiency of a manufacturing process. Possible reasons for an unfavorable production yield variance include:

  • Low quality raw materials
  • Improperly trained production staff
  • Incorrectly set up production equipment

The variance can be separately measured for the use of labor and materials.

Related Courses

Cost Accounting Fundamentals