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

question 103

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 quantity variance for the basic model favorable or unfavorable?

• A) Favorable.
• B) Unfavorable.

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Definitions:

Labour Force

The total number of people employed or seeking employment in a given area or economy.

Expectancy Theory

A psychological theory about motivation predicting that an individual's motivational force is a result of expectancy, instrumentality, and valence.

High Instrumentality

The belief or expectation that high performance will lead to desirable outcomes.

Procedural Justice

The fairness in the processes that resolve disputes and allocate resources, emphasizing transparency, and consistency in the procedures.