ExpertMedium2 marksShort Answer
ACCA · Question 22 · Budgeting and control
Section B - Case 2: AeroLogix
AeroLogix provides drone-based medical delivery. Following from the previous data:
Standard mix for one batch: 6 kg Lithium ($40/kg) + 4 kg Cobalt ($90/kg) = 10 kg total input per batch.
Standard cost per batch = (6 * $40) + (4 * $90) = $240 + $360 = $600.
Standard average cost per kg of input = $600 / 10 kg = $60/kg.
In June, actual production was 100 batches. Total actual input was 1,000 kg (650 kg L + 350 kg C).
Calculate the total material yield variance for June. (Enter your answer as a positive number for adverse, or negative for favorable. Enter 0 if there is no variance).
Section B - Case 2: AeroLogix
AeroLogix provides drone-based medical delivery. Following from the previous data:
Standard mix for one batch: 6 kg Lithium ($40/kg) + 4 kg Cobalt ($90/kg) = 10 kg total input per batch.
Standard cost per batch = (6 * $40) + (4 * $90) = $240 + $360 = $600.
Standard average cost per kg of input = $600 / 10 kg = $60/kg.
In June, actual production was 100 batches. Total actual input was 1,000 kg (650 kg L + 350 kg C).
Calculate the total material yield variance for June. (Enter your answer as a positive number for adverse, or negative for favorable. Enter 0 if there is no variance).
How to approach this question
1. Calculate the standard input required for actual production. 2. Compare this to the total actual input. 3. Multiply the difference by the standard average cost per kg.
Full Answer
Actual production = 100 batches.
Standard input required for 100 batches = 100 * 10 kg = 1,000 kg.
Total actual input used = 650 kg + 350 kg = 1,000 kg.
Difference in yield = 1,000 kg (standard) - 1,000 kg (actual) = 0 kg.
Yield Variance = 0 kg * $60/kg = $0.
The yield was exactly as expected, only the mix changed.
Common mistakes
Trying to calculate yield variance for each material separately and summing them incorrectly, or confusing yield with mix.
Practice the full ACCA PM — Performance Management Practice Exam 2
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