cost variance that arises if the actual production mix deviates from the standard or budgeted mix. In a multiproduct, multi-input situation, the mix variances explain the portion of the quantity (usage, or efficiency) variance caused by using inputs (direct materials and direct labor) in ratios different from standard proportions, thus helping to determine how efficiently mixing operations are performed. The material mix variance indicates the impact on material costs of the deviation from the budgeted mix. The labor mix variance measures the impact of changes in the labor mix on labor costs.
Probable causes of unfavorable production mix variances are as follows: (1) substitution forced by capacity restraints; (2) poor production scheduling; (3) lack of certain types of labor; and (4) certain materials in short supply.
