Question
A firm has two substitutable inputs (Chemical A and Chemical B) for its finished goods units. Typically the firm uses 12 gallons of Chemical A
A firm has two substitutable inputs (Chemical A and Chemical B) for its finished goods units. Typically the firm uses 12 gallons of Chemical A for every 8 gallons of Chemical B.
Chemical A standard price is $40.00 per gallon
Chemical B standard price is $50.00 per gallon
Chemical A actual price is $42.00 per gallon
Chemical B actual price is $45.00 per gallon
During this period, the firm instead actually used 11,000 gallons of Chemical A and 9,000 gallons of Chemical B (producing 20,000 gallons of finished goods).
What is the firm's mix variance for this product this period (round to nearest cent if necessary)?
A: $3,000 favorable
B: $10,000 favorable
C: $3,000 unfavorable
D: $10,000 unfavorable
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