ACCA · Question 23 · Budgeting and control
Section B - Case 2: AeroLogix
AeroLogix provides drone-based medical delivery. At the start of the year, the standard price for drone propellers was set at $15 each. Due to a global shortage of plastics, the general market price rose to $18 each in March. The purchasing manager managed to negotiate a bulk deal and bought propellers for $17.50 each.
If AeroLogix uses planning and operational variances, how should the purchasing manager's performance be evaluated regarding the price of propellers?
Answer options:
They should be penalized for an adverse total price variance of $2.50 per unit.
They should be penalized for an adverse operational price variance of $2.50 per unit.
They should be praised for a favorable operational price variance of $0.50 per unit.
They should be praised for a favorable planning variance of $3.00 per unit.
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