Materials mix variance is that part of material usage variance which arises due to changes in standard and the actual composition of mix. Materials mix variance is the difference between the standard price of the standard mix and the standard price of the actual mix. The standard price is used in calculating this variance. The variance is calculated under two situations:

- When the actual weight of mix is equal to standard weight of mix, and
- When actual weight of mix is different from the standard mix.

When Actual Weight and Standard Weight of Mix is Equal, In this case, the formula for calculating mix variance is :

The standard cost of the standard mix – Standard cost of the actual mix. (Standard Price x Standard Quantity) – (Standard Price x Actual Quantity) Or Standard unit cost (Standard Quantity – Actual Quantity)

In case standard quantity is revised due to shortage of one material, the formula will be equal to

Standard unit cost (Revised Standard Quantity – Actual Quantity).

When Actual Weight and Standard Weight of Mix are Different When quantities of actual material mix and standard material mix are different, the formula will be:

Total Weight of Actual mix Total Weight of Standard mix – (Standard cost of actual mix)

In case the standard is revised due to the shortage of one material then revised standard will be used instead of the standard, the formula will become:

Total Weight of Actual mix Total Weight of Revised Standard mix Standard cost of Revised Standard mix