## 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

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