Yield

Yield is the effective cost to the issuer of the security or actual rate of return to the investor for a particular time period. It varies from the nominal interest rate. Yield is also called as return from an asset or service provided.

Yield Variance is the result of varying the total input of the factor of production (for example labor or direct materials) while holding constant the input mix (the proportions labor used and the types of materials used ) and the weighted average input rate of the factor of production.

Production Yield Variance

The production yield variance is the difference between the stand yield and the actual yield. Yield is the measure of the productivity. In other words, it is the measure of the output from the given level of input. For example, in the production of banana chips, we may expect certain amount yield such as fifty percent yield or fifty kilograms of chips for hundred kilograms of banana.

If the actual yield is less than the standard or expected yield for a given amount of input, then the yield variance is adverse or not favorable. The yield variance is calculated for labor and for the materials. The labor yield variance is referred as the outcome of the quality and / or the quantity of the labor utilized.  The yield variance describes the remaining part of the quantity variance and it is caused by the yield of the finished goods which does not correspond with quantity which actual inputs must have produced. When there is no mix variance, then the yield variance would equals the quantity variance.

Material Yield Variance:  (Actual units used at standard mix- Actual Output Units used at standard mix) x Standard Unit Price.

Labor yield Variance: (Actual Hours used at Standard mix- Actual Output hours used at standard mix) x Standard Hourly Rate.

Questionnaire:

• What is yield?
• What is Yield Variance?