ExpertHard2 marksMultiple Choice
ACCA · Question 22 · Budgeting and control
Section B - Case 2: GreenYield Agri
GreenYield Agri produces 'CropBoost', a specialized liquid fertilizer. The standard mix for 10,000 liters of input is:
- Chemical A: 6,000 liters at $10 per liter
- Chemical B: 4,000 liters at $15 per liter
Standard normal loss is 20% of input (so 10,000 liters input yields 8,000 liters of CropBoost).
In May, GreenYield inputted 10,000 liters in total, consisting of 7,000 liters of Chemical A and 3,000 liters of Chemical B. Actual yield was 7,600 liters of CropBoost.
Calculate the Material Yield Variance for May.
Section B - Case 2: GreenYield Agri
GreenYield Agri produces 'CropBoost', a specialized liquid fertilizer. The standard mix for 10,000 liters of input is:
- Chemical A: 6,000 liters at $10 per liter
- Chemical B: 4,000 liters at $15 per liter
Standard normal loss is 20% of input (so 10,000 liters input yields 8,000 liters of CropBoost).
In May, GreenYield inputted 10,000 liters in total, consisting of 7,000 liters of Chemical A and 3,000 liters of Chemical B. Actual yield was 7,600 liters of CropBoost.
Calculate the Material Yield Variance for May.
Answer options:
A.
$6,000 Favorable
B.
$5,000 Adverse
C.
$6,000 Adverse
D.
$4,800 Adverse
How to approach this question
1. Find standard yield from actual inputs. 2. Compare to actual yield. 3. Multiply the difference by the standard cost per unit of output.
Full Answer
C.$6,000 Adverse✓ Correct
1. Standard yield from 10,000 liters input = 8,000 liters (20% loss).
2. Actual yield = 7,600 liters.
3. Difference in yield = 400 liters Adverse.
4. Standard cost per liter of output = Total standard input cost / Standard yield = $120,000 / 8,000 = $15 per liter.
5. Yield Variance = 400 liters * $15 = $6,000 Adverse.
Common mistakes
Multiplying the 400 liter difference by the average input cost ($12) instead of the standard output cost ($15).
Practice the full ACCA PM — Performance Management Practice Exam 6
32 questions · hints · full answers · grading
More questions from this exam
Q1**Section A**
A global logistics NGO uses Big Data analytics to optimize its disaster relief sup...EasyQ2**Section A**
FinTech Innovators Inc. is migrating its management accounting systems to a public...MediumQ3**Section A**
A commercial forestry company uses an Executive Information System (EIS) to monito...EasyQ4**Section A**
SolarTech manufactures solar panels. The factory has a total operating cost of $12...MediumQ5**Section A**
A chemical manufacturing company is implementing Environmental Management Accounti...Medium