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

question 24

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 deluxe model favorable or unfavorable?

• A) Favorable.
• B) Unfavorable.

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Definitions:

Sample Proportions

A rephrased version: The ratios or percentages within a sample that represent a particular attribute or category, quantified for analytical purposes.

Population Proportion

The proportion or ratio of a group displaying a specific attribute or trait.

Standard Error

A statistical measure that quantifies the extent to which a sample statistic varies from the actual population parameter.

Population Parameter

A numerical characteristic or measure that describes an aspect of a population, such as its mean or variance.