Question 1

Section A

AgriGrow produces organic fertilizer. The standard material cost is $5 per kg. The standard yield is 90% of input. In June, 10,000 kg of material were input, and 8,800 kg of good output were produced. What is the material yield variance?

Accepted Answer

Calculate expected output (90% of 10,000 = 9,000). Compare to actual output (8,800). The shortfall is 200 units. Multiply by the standard input cost ($5).

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Calculating the variance as favorable, or using the wrong standard cost multiplier.

Section A

AgriGrow produces organic fertilizer. The standard material cost is $5 per kg. The standard yield is 90% of input. In June, 10,000 kg of material were input, and 8,800 kg of good output were produced. What is the material yield variance?

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA MA — Management Accounting Practice Exam 3

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