The fixed budget indicates a sales of $50,000. Actual sales were $55,000. The variance is:

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Multiple Choice

The fixed budget indicates a sales of $50,000. Actual sales were $55,000. The variance is:

Explanation:
Variance compares what actually happened to what was planned. Here, the fixed budget planned sales of 50,000, while actual sales were 55,000. The difference is 5,000 in favor of the plan, so this is a favorable variance. The amount is 5,000 because actual is higher than budget. If actual sales had been lower, it would be unfavorable; If it were the same, there would be no variance.

Variance compares what actually happened to what was planned. Here, the fixed budget planned sales of 50,000, while actual sales were 55,000. The difference is 5,000 in favor of the plan, so this is a favorable variance. The amount is 5,000 because actual is higher than budget. If actual sales had been lower, it would be unfavorable; If it were the same, there would be no variance.

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