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

During May, a global shortage caused the market price of Chemical A to unexpectedly rise to $12 per liter (this is the revised standard). The purchasing manager actually bought the 7,000 liters of Chemical A used in May for $11.50 per liter.

Calculate the operational material price variance for Chemical A for May. (Enter your answer as a positive number followed by F or A, e.g., 3500 F or 3500 A)

Accepted Answer

Operational Price Variance = (Revised Standard Price - Actual Price) * Actual Quantity.

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Comparing the actual price to the original standard price ($10), which would give a $10,500 Adverse total price variance.

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA PM — Performance Management Practice Exam 6

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