ACCA · Question 23 · 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:
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.
Which of the following best explains the relationship between the mix and yield variances calculated for May?
Answer options:
Using a higher proportion of the cheaper Chemical A resulted in a favorable mix variance, but degraded the quality of the process, leading to higher wastage and an adverse yield variance.
Using a higher proportion of the expensive Chemical B resulted in an adverse mix variance, but improved the yield.
The production manager successfully optimized both cost and output quality.
The variances are unrelated and caused by external market price fluctuations.
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