DIRECT MATERIALS YIELD AND MIX VARIANCES When we initially examined materials and labour variances in Chapter 4, we saw that managers sometimes make trade-offs between price and efficiency variances. For example, an orange-juice bottler may use oranges whose juice content is lower than budgeted if their price is significantly lower than the price of oranges with the budgeted juice content. The yield and mix variances calculated in this section provide additional insight into the effect that yield and mix factors have on operating income. Yield and mix variances divide the efficiency variance calculated in Chapter 4; hence, we start by reviewing efficiency and price variances.
