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Question 1: XYZ Inc. sells a single product for a budgeted selling price of $30 per unit. Budgeted direct materials costs were $5 per unit, while budgeted direct labour and variable overhead costs were $3 and $2 respectively. Budgeted fixed overhead costs amount $25,000 per month. The company has a practical production capacity of 10,000 units per month. Budgeted Variable selling costs are $2 per unit. Budgeted Fixed selling costs are $2,000 per month. During the company's first month of operations, the company produced 10,000 units and sold 7,500 units at an average selling price of $18 per unit. Fixed and variable costs were as budgeted. The company's sales volume variance was:
a) $10,000 unfavourable
b) $ 50,000 favourable
c) $ 10,000 favourable
d)$ 75000 unfavourable
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