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Section B - Case 2: BioGrow Agriculture
BioGrow is an agricultural company producing a premium organic fertilizer. The standard material mix for one batch of fertilizer is:
- Material Alpha: 60 kg at $10 per kg
- Material Beta: 40 kg at $15 per kg
During the last month, BioGrow produced several batches. The actual total input was 10,000 kg of material, consisting of:
- 5,500 kg of Material Alpha
- 4,500 kg of Material Beta
Calculate the total material mix variance in dollars. (Enter the numerical value only. Assume the variance is Adverse, do not enter 'A' or 'Adverse')
ACCA · Question 24 · Budgeting and control
Section B - Case 2: BioGrow Agriculture
BioGrow is an agricultural company producing a premium organic fertilizer. The standard material mix for one batch of fertilizer is:
- Material Alpha: 60 kg at $10 per kg
- Material Beta: 40 kg at $15 per kg
BioGrow also sells two types of finished fertilizer: Standard and Premium. The sales director notes that total sales volume was exactly as budgeted, but the company sold more Premium fertilizer and less Standard fertilizer than planned.
Which of the following variances will definitely arise from this situation?
Section B - Case 2: BioGrow Agriculture
BioGrow is an agricultural company producing a premium organic fertilizer. The standard material mix for one batch of fertilizer is:
- Material Alpha: 60 kg at $10 per kg
- Material Beta: 40 kg at $15 per kg
BioGrow also sells two types of finished fertilizer: Standard and Premium. The sales director notes that total sales volume was exactly as budgeted, but the company sold more Premium fertilizer and less Standard fertilizer than planned.
Which of the following variances will definitely arise from this situation?
Answer options:
An adverse sales quantity variance.
A favorable sales quantity variance.
A favorable sales mix variance.
An adverse sales mix variance.
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