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

question 35

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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What is the sales mix variance for the deluxe model?

• A) $1,176,000.
• B) $1,344,000.
• C) $2,400,000.
• D) $2,520,000.

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Definitions:

Bushels

A unit of volume that is used primarily in the United States to measure agricultural produce, such as grains, fruits, and nuts.

Pecks

A traditional unit of volume used for dry goods, equivalent to approximately 9 liters or a quarter of a bushel.

Demand Function

A mathematical formula representing the relationship between the quantity of a good consumers are willing to buy and the price of the good, alongside other factors like income and the prices of related goods.

Total Revenue

The total income generated from the sale of goods or services before any costs are subtracted.