(b) Question 6 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 @RM30 per litre 0.3 litres of chemical B @ RM20 per litre 0.5 litres of chemical C @ RM15 per litre Standard material cost of 1 litre of spray During August GRV produced 1,000 litres of this spray using the following chemicals: 600 litres of chemical A costing 250 litres of chemical B costing 500 litres of chemical C costing RM 12.00 6.00 7.50 25.50 RM 18,000 8,000 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: 1 11. Calculate the following operational variances: direct material mix and direct material yield Discuss the decision taken by the Production Manager