Answer the Following Questions Using the Information Below:
the Corata

question 16

Multiple Choice

Answer the following questions using the information below:
The Corata Appliance Manufacturing Corporation manufactures two vacuum cleaners, the Standard and the Super. The following information was gathered about the two products:
$\begin{array}{lrr}&\text { Standard }&\text { Super }\\\text { Bud geted sales in units } & 2,400 & 600 \\\text { Bud geted selling price } & \$ 600 & \$ 1,700 \\\text { Bud geted contribution margin per unit } & \$ 400 & \$ 1,050 \\\text { Actual sales in units } & 2,800 & 1,200 \\\text { Actual selling price } & \$ 650 & \$ 1,680\end{array}$
-What is the total sales-quantity variance in terms of the contribution margin?

• A) $260,000 favorable
• B) $790,000 favorable
• C) $530,000 favorable
• D) $290,000 favorable

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Definitions:

Accounts Receivable Factor

A financial transaction where a company sells its accounts receivable to a third party (factor) at a discount, to obtain immediate cash.

Bad Debt Risk

The risk that money owed to a company by debtors will not be paid and thus become a bad debt.

Compensating Balance

A minimum account balance that a borrower must maintain as part of a condition for obtaining a loan.

Line of Credit

A flexible loan from a bank or financial institution that allows a borrower to draw and use funds up to a designated limit.