A machine distributor sells two models, basic and deluxe. The following informat
ID: 2502804 • Letter: A
Question
A machine distributor sells two models, basic and deluxe. The following information relates to its master budget.
Basic
Deluxe
Sales (units)
8,000
2,000
Sales price per unit
$8,000
$12,000
Variable costs per unit
$6,400
$9,000
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.
1. What is the sales activity variance for the basic model?
$1,280,000 - $1,600,000 - $11,200,000 - $12,800,000
$400,000 - $800,000 - $1,600,000 - $2,400,000
4. What is the sales mix variance for the basic model?
$256,000 - $1,344,000 - $2,520,000 - $1,600,000
5. What is the sales quantity variance for the basic model?
$120,000 - $256,000 - $1,344,000 - $1,600,000
$1,176,000 - $1,344,000 - $2,400,000 - $2,520,000
$120,000 - $256,000 - $1,344,000 - $1,600,000
9. Is the sales quantity variance for the basic model favorable or unfavorable?
Basic
Deluxe
Sales (units)
8,000
2,000
Sales price per unit
$8,000
$12,000
Variable costs per unit
$6,400
$9,000
Explanation / Answer
A machine distributor sells two models, basic and deluxe. The following information relates to its master budget.
Basic
Deluxe
Sales (units)
8,000
2,000
Sales price per unit
$8,000
$12,000
Variable costs per unit
$6,400
$9,000
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.
1. What is the sales activity variance for the basic model?
sales activity variance for the basic model = (8000-7000)*(8000-6400) = $ 1600,000
$1,600,000
sales activity variance for the basic model is unfavorable
sales activity variance for the deluxe model = (2800-2000)*(12000-9000) = $ 2400,000
$2,400,000
4. What is the sales mix variance for the basic model?
sales mix variance for the basic model = (7840-7000)*(8000-6400) = 1344000
$1,344,000
5. What is the sales quantity variance for the basic model?
sales quantity variance for the basic model = (8000-7840)*(8000-6400) = 256000
$256,000
sales mix variance for the deluxe model based = (2800-1960)*(12000-9000)= $2,520,000
$2,520,000
the sales mix variance for the deluxe model is favorable
sales quantity variance for the deluxe model =(2000-1960)*(12000-9000)= 120000
$120,000
9. Is the sales quantity variance for the basic model favorable or unfavorable?
the sales quantity variance for the basic model is unfavorable
Basic
Deluxe
Sales (units)
8,000
2,000
Sales price per unit
$8,000
$12,000
Variable costs per unit
$6,400
$9,000
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