A machine distributor sells two models, basic and deluxe. The following information relates to its master budget.
$$\begin{array} { l c c }
& \text { Basic } & \text { Deluxe } \
\text { Sales (units) } & 8,000 & 2,000 \
\text { Sales price per unit } & \$ 8,000 & \$ 12,000 \
\text { Variable costs per unit } & \$ 6,400 & \$ 9,000
\end{array}$$
Actual sales were 7,000 basic models and 2,800 deluxe models. The actual sales prices were the same as the budgeted sales prices for both models.
-
Is the sales quantity variance for the basic model favorable or unfavorable?
A) Favorable.
B) Unfavorable.

Question

A machine distributor sells two models, basic and deluxe. The following information relates to its master budget.
$$\begin{array} { l c c } 
& \text { Basic } & \text { Deluxe } \
\text { Sales (units) } & 8,000 & 2,000 \
\text { Sales price per unit } & \$ 8,000 & \$ 12,000 \
\text { Variable costs per unit } & \$ 6,400 & \$ 9,000
\end{array}$$
Actual sales were 7,000 basic models and 2,800 deluxe models. The actual sales prices were the same as the budgeted sales prices for both models.
-
Is the sales quantity variance for the basic model favorable or unfavorable?
A) Favorable.
B) Unfavorable.

Quizplus · Accepted Answer

The sales quantity variance for the basic model is unfavorable because the actual sales (7,000 units) were less than the budgeted sales (8,000 units), resulting in lower revenue than expected.

A Machine Distributor Sells Two Models, Basic and Deluxe Actual Sales Were 7,000 Basic Models and 2,800 Deluxe Models