A Machine Distributor Sells Two Models,basic and Deluxe What Is the Sales Activity Variance for the Basic Model

question 98

Multiple Choice

A machine distributor sells two models,basic and deluxe.The following information relates to its master budget.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. $$\begin{array} { | l | r | r | } \hline & \text { Basic } & \text { Deluse } \\\hline \text { Sales (units) } & 8,000 & 2,000 \\\hline \text { Sales price per unit } & \$ 8,000 & \$ 12,000 \\\hline \text { Variable costs per unit } & \$ 6,400 & \$ 9,000 \\\hline\end{array}$$ What is the sales activity variance for the basic model?

• A) $1,280,000.
• B) $1,600,000.
• C) $11,200,000.
• D) $12,800,000.

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Definitions:

Revenue Test

A criterion used to gauge the amount of revenue generated by a company, project, or product, crucial for decision-making and financial analysis.

Operating Segments

Components of a business that engage in business activities from which it may earn revenues and incur expenses, often reported in financial statements for diversified companies.

LIFO Method

"Last In, First Out," an inventory valuation method where the most recently purchased items are the first to be sold, affecting the cost of goods sold and inventory valuation.

FIFO Method

"First In, First Out," an accounting method for valuing inventory, where the earliest items acquired are the first to be sold.