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

question 6

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.
-
Is the sales mix variance for the deluxe model favorable or unfavorable?

• A) Favorable.
• B) Unfavorable.

---

Definitions:

Economy

A system of production, distribution, and consumption of goods and services within a certain geographical area or country.

Goods Produced

Refers to the outcomes of manufacturing or production processes within an economy, encompassing both tangible products and intangible services.

Value Created

The difference between the value of an entity's outputs and the cost of inputs used, indicating the economic value added by the entity.

Capital Investment

Funds expended by a business to acquire or upgrade physical assets such as property, industrial buildings, or equipment.