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

question 130

Multiple Choice

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.
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Is the sales activity variance for the basic model favorable or unfavorable?

• A) Favorable.
• B) Unfavorable.

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Definitions:

Total Breach

A significant failure to fulfill a core obligation of a contract, allowing the other party to terminate the agreement and seek damages.

Estoppel

A legal principle preventing someone from arguing something contrary to a claim previously made or acted upon in good faith.

Waiver

The intentional relinquishment of a known right. It is a voluntary act and implies an election by the party to dispense with something of value, or to forgo some advantage that he or she might have demanded and insisted on.

Personal Satisfaction

A contractual condition requiring an obligation to be performed to the personal satisfaction of one of the parties involved, subject to reasonable criteria.