Question 1

**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).

During May, a global shortage caused the market price of Chemical A to unexpectedly rise to $12 per liter. GreenYield's management decides to revise the standard price retrospectively to evaluate the purchasing manager's performance fairly.

The difference between the original standard cost and the revised standard cost is known as what type of variance?

Accepted Answer

Recall the definitions of planning and operational variances. Planning = Original Std vs Revised Std. Operational = Revised Std vs Actual.

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Confusing planning variance with operational variance.

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA PM — Performance Management Practice Exam 6

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