Question Four GRV is a chemical processing company that produces sprays used by farmers to protect their crops. One of these sprays is made by mixing three chemicals. The standard material cost details for 1 litre of this spray is as follows: $ 0.4 litres of chemical A @ $30 per litre 12.00 0.3 litres of chemical B @ $20 per litre 6.00 0.5 litres of chemical C @ $15 per litre 7.50 Standard material cost of 1 litre of spray 25.50 During August GRV produced 1,000 litres of this spray using the following chemicals: 600 litres of chemical A costing $18,000 250 litres of chemical B costing $8,000 500 litres of chemical C costing $8,500 You are the Management Accountant of GRV and the Production Manager has sent you the following e-mail: I was advised by our purchasing department that the worldwide price of chemical B had risen by 50%. As a result, I used an increased proportion of chemical A than is prescribed in the standard mix so that our costs were less affected by this price change. Required: (a) Calculate the following operational variances: (i) direct material mix and (3 marks) (ii) direct material yield (2 marks) (b) Discuss the decision taken by the Production Manager. (5 marks) (Total for Question Four = 10 marks)