What question did this study set out to answer?

The paper aims to highlight the issues in traditional yield and mix variances that can lead to misleading decisions.

March 18, 2026

A Note on Yield Variance and Mix Variance.

YPYoram C. PelesHebrew University of Jerusalem

Key Points

The paper aims to highlight the issues in traditional yield and mix variances that can lead to misleading decisions.
Discusses the partitioning of sales and production variance into yield and mix variances.
Identifies defects in traditional methods related to unit price variability.
Proposes alternative methods for calculating yield and mix variances based on production costs.
Traditional variances can yield conflicting positive or negative interpretations based on measurement choices.
The proposed methods improve clarity and decision-making by standardizing unit price evaluation.

Abstract

Abstract ABSTRACT: The sales activity variance as well as the corresponding production variance are typically partitioned into a yield variance and a mix variance. These latter variances have a defect which can lead to dysfunctional decisions. Since these variances are based on an average unit price which varies with respect to the unit of measurement selected, the same real events can appear as positive or negative variances. Alternative variances for mix and yield which do not have the above defect are suggested, based on expressing the units of goods sold by their cost of production.

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