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 basic model favorable or unfavorable?
A) Favorable.
B) Unfavorable.

Question

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 basic model favorable or unfavorable?
A) Favorable.
B) Unfavorable.

Quizplus · Accepted Answer

The sales mix variance for the basic model is unfavorable because fewer basic models were sold than planned (7,000 actual vs. 8,000 budgeted), leading to a lower proportion of basic models in the sales mix.

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