Answer:
D) substantial, but not complete, performance
Explanation:
Even though Moses breached his contract with Noelle, most part of the contract was performed. The most significant part of the contract was the apartment itself, not the air conditioning system. For a material breach to exist Moses should have failed to perform in a greater way, not just the air conditioning. Probably Noelle should get a discount on the price of the apartment so that she can get the air conditioning system installed.
The fact that Noelle stopped paying for the apartment just because of this is a little overreacting. For example, if I buy a used car and the previous owner forgets to give me the spare tire, I cannot stop paying because it may be worth money but proportionally it's a small amount.
According to the sticky-price model, other things being equal, the greater the proportion s of firms that follow the sticky-price rule, the ______ the ______ in output in response to an unexpected price increase.
a. greater; decrease.
b. smaller; increase.
c. greater; increase.
d. smaller; decrease.
Answer:
The correct answer is c. greater; increase.
Explanation:
The models follow one another by altering the assumptions about the flexible or rigid nature of the prices determined in the different markets.
• Flexible price: the price varies, increasing when there is excess demand and decreasing when there is excess supply.
• Rigid price: it does not follow the logic of the mentioned variation because it responds to other factors or because although it varies according to the logic described above, it does not do so sufficiently for the market to balance instantly. (IMP .: do not confuse rigid price with constant price).
Xeris, Inc. has 1,000 shares of 5%, $100 par value, cumulative preferred stock and 50,000
shares of $1 par value common stock outstanding at December 31, 2010. What is the
annual dividend on the preferred stock?
a. $50 per share
b. $5,000 in total
c. $500 in total
d. $.50 per share
Answer:
b. $5,000 in total
Explanation:
Preference shares which are cumulative in nature, require a fixed dividend, even in case it is not paid in the current year, the amount gets accumulated and then had to be paid in next year.
But in no manner the payment can be declined.
The rate written as a prefix to preference shares provide for the fixed dividend.
In the given case 5%
Total par value of preference shares = $100 [tex]\times[/tex] 1,000 = $100,000
Dividend = 5% of $100,000 = $5,000
Final answer:
The annual dividend on the preferred stock for Xeris, Inc. is $5 per share, resulting in a total annual dividend of b. $5,000 for all 1,000 shares.
Explanation:
The annual dividend on the preferred stock for Xeris, Inc. is calculated by taking the percentage of the dividend rate times the par value of each share. Since Xeris, Inc. has 1,000 shares of 5%, $100 par value cumulative preferred stock, you multiply 5% (or 0.05 as a decimal) by the $100 par value to find the dividend per share.
Then, multiply that dividend per share by the total number of preferred shares to find the total annual dividend. The dividend per share is $5.00 (0.05 x $100), and the total annual dividend for all 1,000 shares would be $5,000 (1,000 x $5.00). Therefore, the correct answer is b. $5,000 in total.
Day care for children is a competitive industry in long-run equilibrium at a price of $60 per day. In an effort to make day care more affordable for a larger number of families, the government passes a law that limits the amount day care providers can charge to $45 per day. As a result of this price ceiling, A. parents have a more difficult time finding day care providers for their children. B. the demand for day care increases and causes price to rise above the original $60 per day. C. the demand for day care increases and many new day care centers are established. D. the supply of day care services falls and causes price to fall below $45 per day.
Answer:
A. parents have a more difficult time finding day care providers for their children.
Explanation:
A price ceiling is usually set by the government or an agency of the government and it usually places a maximum amount on the prices that can be charged for a good or service.
When a price ceiling is set below equilibrium price, it usually discourages producers or suppliers who respond by reducing the quantity supplied.
Therefore, if a price ceiling is placed on day care, a lot of day care centres would close which would make it difficult for parents to find centres for their kids. Since a price ceiling is binding, prices would not increase.
I hope my answer helps you.
All the best
Setting a price ceiling of $45 on day care services below the equilibrium price of $60 creates a shortage, making option A the most likely outcome where parents struggle to find available providers.
When the government sets a price ceiling on day care services at $45 per day, which is below the long-run equilibrium price of $60 per day, this results in a shortage of day care services. Supply and demand analysis suggests that at this lower price, more parents will want day care services (since it is now more affordable), but fewer day care providers will be willing to offer their services at the lower price. This mismatch between higher demand and lower supply leads to a shortage.
Considering the options provided, the most likely and immediate outcome of instituting a price ceiling would be: A. parents have a more difficult time finding day care providers for their children. This is because the quantity of day care services demanded by parents will exceed the quantity supplied by providers at the price ceiling of $45, making it more challenging for parents to find available spots for their children.
At the end of 2020, Oriole Co. has accounts receivable of $775,800 and an allowance for doubtful accounts of $71,100. On January 24, 2021, the company learns that its receivable from Megan Gray is not collectible, and management authorizes a write-off of $7,200. On March 4, 2021, Oriole Co. receives payment of $7,200 in full from Megan Gray. Prepare the journal entries to record this transaction.
Answer:
January 24, 2021 (write off)
Dr Allowance for Doubtful Accounts account 7,200
Cr Accounts Receivable account 7,200
March 4, 2021 (write off reversing)
Dr Accounts Receivable account 7.200
Cr Allowance for Doubtful Accounts account 7,200
March 4, 2021 (record collection)
Dr Cash account 7,200
Cr Accounts Receivable account 7,200
Final answer:
On January 24, 2021, Oriole Co. would write off Megan Gray's uncollectible account by debiting Allowance for Doubtful Accounts and crediting Accounts Receivable for $7,200. Upon receiving the payment on March 4, 2021, the company would reverse the write-off and then record the cash receipt.
Explanation:
When Oriole Co. writes off Megan Gray's uncollectible account, the journal entry on January 24, 2021, will involve debiting the Allowance for Doubtful Accounts and crediting Accounts Receivable. This action does not affect the total assets, as it is merely an adjustment within assets.
The journal entry on January 24, 2021 would be:
Debit Allowance for Doubtful Accounts $7,200
Credit Accounts Receivable $7,200
Upon receiving the unexpected payment from Megan Gray on March 4, 2021, Oriole Co. would reverse the previous write-off and then recognize the cash receipt. The journal entries would be:
Debit Accounts Receivable $7,200
Credit Allowance for Doubable Accounts $7,200
Followed by:
Debit Cash $7,200
Credit Accounts Receivable $7,200
This sequence makes sure the receivable is reinstated before the cash is recognized, allowing the books to reflect the actual transaction flow.
A particular brand of shampoo costs 6 Canadian dollars in Toronto. The nominal exchange rate is about 1.2 and the real exchange rate is .90 . These numbers imply that the U.S. dollar price of the same shampoo is about___________.
a. $7.99
b. $6.49
c. $5.39
d. $4.49
Answer:
The correct answer is D that is $4.49
Explanation:
The US dollar price of the shampoo is computed as:
Price in US = (Price in Canada × Real exchange)/ Nominal exchange rate
where
Real exchange is 0.90
Price in Canada is 6
Nominal exchange rate is 1.2
Putting the values above:
Price in US = (6 × 0.90) / 1.2
= 5.4 / 1.2
= $4.49 or $4.5
A flight route is served by American Airlines (AA) and Southwest Airlines (SW). Suppose American is the industry leader American will decide whether to raise airfares, and then Southwest will decide whether to match the price increase. What is the Nash equilibrium of the game?
a) The game does not have a Nash equilibrium.
b) American will leave fares unchanged and Southwest will leave fares unchanged
c) American will leave fares unchanged and Southwest will raise fares
d) American will raise fares and then Southwest will leave fares unchanged
e) American will raise fares and then Southwest will raise fares.
Answer:
The correct answer is b) American will leave fares unchanged and Southwest will leave fares unchanged.
Explanation:
The Nash Balance is a situation where individuals or players have no incentive to change their strategy taking into account the strategy of their opponents.
In the Nash equilibrium, the strategy chosen by each participant of a conflict or game is optimal, given the strategy chosen by the others. In other words, nobody will gain anything if they decide to change their strategy under the assumption that the other individuals do not change theirs.
It should be noted that under the Nash equilibrium the greatest gain is not necessarily obtained for all individuals or players as a whole. It is only true that each responds optimally to the strategy of others. In many cases, individuals would like to be able to reach another balance with higher profits but fail to do so because they face the risk of being betrayed.
Kevin Chitry, a sales executive for CIT Manufacturing, frequently took clients out for dinner and shows when they came to town to tour the plant. He usually paid for these expenses himself and submitted the receipts to his supervisor for approval and reimbursement. Occasionally, however, he also took his family out to restaurants and rock concerts and included these expenses in his reimbursement requests by indicating that he was entertaining a client. This type of fraud is known as a(n):
Answer: Mischaracterized expense
Explanation:
Here, in this particular case we can state that this kind of fraud is referred to as a Mischaracterized expense. Mischaracterized expense are referred to as the situation under which an employee tends to attempts or try to receive the remuneration or rectification for the personal expense by further categorizing it as an organization expense.
What type of marketing uses a variety of forms to communicate directly with target customers to generate a response or transaction? see the attached file which has more questions
a) Public Relations
b) Publicity
c) Direct
d) Sales
e) Place
Answer:
C)Direct marketing is the correct answer.
Explanation:
The promotional method in which the information of company, product or survive is promoted directly to the customer without the use of advertising middleman is called direct marketing. In this method potential interest is presented to a consumer that is a likely buyer. Various of direct marketing are catalogues, fliers, Newsletters, phone calls etc. Although some marketing techniques aim to educate about company's products but the direct marketing aims to persuade people to take action, getting the sale is the ultimate goal.
The § 222 deduction for tuition and related expenses is available: a.Regardless of the amount of a taxpayer's MAGI. b.To cover room and board expenses to attend college. c.Even if a taxpayer does claim the standard deduction. d.To a married taxpayer filing a separate return. e.None of these
Answer:
e.None of these
Explanation:
The 222 deduction for tuition and related expenses is not available in above given options.
ABC’s investment managers buy an assortment of stocks and bonds or other investments and then repackage them into different products investors may wish to purchase. The company then sells shares of their ________ to interested investors.
Answer:
mutual funds
Explanation:
Mutual funds are made up of a pool of money from different investors and that money is used to buy securities, stocks, bonds, etc. The mutual fund manager decides on what the mutual fund will invest. The mutual fund's portfolio has to be structured to match the investment objectives of the fund. Mutual funds are usually considered safe investments since a large portion of their funds comes from employer sponsored retirement plans.
Dia is a computer engineer in a small company. She notices that the company does not have its own website and realizes that the company needs one. In this example, Lydia is in the stage of the creative process. Maurice has decided the theme for his university's photography contest. He concentrates and comes up with several ideas for its implementation without finalizing or evaluating them. In this scenario, Maurice is in the stage of the creative process. Lucy, a doctoral fellow, does not appear to be working on the preliminary research presentation to be delivered next week. However, she has collected all the required data and her subconscious mind is engaged. This example shows an individual in the stage of the creative process:__________
Answer:
The answer is incubation process of creativity
Explanation:
This example shows an individual in the stage of the creative process called incubation. Because it is related to her intuition and insights about what she knows and intents to her presentation.
Jim has part ownership in a house. He has decided to sell his interest. He signs an agreement with a local real estate designated broker without informing the other two owners. Jim is most likely holding his part ownership as:_______
Answer:
joint tenant
Explanation:
Based on the information provided within the question it seems that Jim is most likely holding his part ownership as joint tenant. This is a unique type of ownership in which more than one individual share ownership of a property. These individuals share the exact same amount of rights to do with the property as they wish. Which is why Jim was able to sign away his part of the ownership without informing the other owners.
In 2018, Gathering Company repurchased its own stock at a cost of $ 48,000. During the year, the company purchased land with cash for $ 124,000 and issued bonds payable for $ 375,000. Net cash provided by financing activities for the year would have been _________.
Answer:
$327,000
Explanation:
Stocks owned by the Gathering Company after repurchasing = $48,000
Cash paid for the purchase of land = $124,000
Amount of issued bonds payable = $375,000
Now,
Net cash provided by financing activities for the year would have been
= Amount of issued bonds payable - Stocks owned by the Gathering Company
= $375,000 - $48,000
= $327,000
Last summer, to earn money for their college tuition, George and Tom operated a food kiosk at Clearwater Beach, Florida for 3 months. They sold soft drinks, chips, crackers, and candy bars. A month before they were planning to open, Larry found a location that rented for $500 a month and a small refrigerator unit which they rented for $60 per month. Alan found distributors for the food products as well as for the paper products that they would need. Alan also purchased a business license for $80 and bought 3-month's worth of liability insurance for $100. The cups, straws, napkins, and extra sales people needed to staff the stand are all examples of:Marginal costs.Break even points.Variable costs.Fixed costsAverage costs.
Answer: Fixed Costs
Explanation: Fixed Costs are cost incurred by an organisation during the cause of business.
They are fixed in nature which means they are incurred in as much as the business is operational. They are costs that must be incurred on the business and they include salaries and wages, cost of consumables, rent, rate etc.
Fixed costs are constant when calculating the profit or loss of a business.
When setting prices, the price floor is usually defined by ______ of producing and marketing the product.A. The total costsB. The total fixed costsC. The average variable costsD. The average total costsE. None of the above.
Answer: Option E - None of the above
Explanation:
Price floor is a situation whereby, the price to be charged falls above or below the market's force equilibrium price of supply and demand. This can be government or group imposed price, price floor has to be above the equilibrium price for it to be effective.
You are going to form a partnership with an organization that sells domain names. What kind of organization is your partner?
Answer: The correct answer is : register
Explanation: The registrar is an accredited organization that sells domain names to the public, these domains are not yet owned by anyone or they can be registered. These companies also offer domain hosting. You can register a domain using Google Domains.
If the principal decides to __________ the unauthorized agent's signature, the principal will then become liable for the instrument, while the agent will escape personal liability
Answer:
WORK THE unauthorized agent's signature
Explanation:
True or False: If Hubert's Fire Engines were a competitive firm instead and $100,000 were the market price for an engine, decreasing its price from $100,000 to $80,000 would result in the same change in the production quantity and, thus, total revenue.
Answer:
False
Explanation:
In a perfectly competitive market the sales revenue is based on pricing also. As the pricing policy also plays an important role in the marketing technique to attract customers.
As the quality served is generally the same in the market, there is no issue in that but when the price is reduced expected sales will increase and accordingly the expected revenue also increases.
As the sales is expected to increase the revenue will also increase accordingly, even though the price is reduced, due to increase in sales quantity the expected change shall not be same as that of the change in price.
Thus, the statement is False.
Carol wants to invest money in a 6% CD account that compounds semiannually. Carol would like the account to have a balance of $130,000 7-years from now. How much must Carol deposit to accomplish her goal?
Carol must deposit approximately $86,040.31 today into a 6% CD account compounded semiannually to have $130,000 in 7 years. The calculation involves rearranging the compound interest formula to solve for the present value, then substituting the given values to find the required initial deposit.
Finding the Present Value for a Compound Interest Account
To find out how much Carol needs to deposit today to reach her goal of $130,000 in 7 years with an interest rate of 6% compounded semiannually, we need to use the formula for the present value of a future amount in compound interest, which is:
A = P(1 + r/n)(nt)
Where:
A is the future value of the investment/loan, including interest.
P is the principal investment amount (the initial deposit or loan amount).
r is the annual interest rate (decimal).
n is the number of times that interest is compounded per year.
t is the time the money is invested or borrowed for, in years
In Carol's case, we have:
A = $130,000
r = 6% or 0.06 (as a decimal)
n = 2 (since the interest is compounded semiannually)
t = 7 year
Now, we can rearrange the formula to solve for P (the present value):
P = A / (1 + r/n)(nt)
Substituting the values we get:
P = $130,000 / (1 + 0.06/2)²ˣ⁷
P = $130,000 / (1 + 0.03)¹⁴
P = $130,000 / (1.03)¹⁴
P = $130,000 / 1.5103844462
P ≈ $86,040.31
Carol must deposit approximately $86,040.31 today to have a balance of $130,000 in a 6% CD account compounded semiannually after 7 years.
Brenda has been offered choices when selecting her benefits. She knows she wants health insurance, is unsure of vision insurance, and does not want dental insurance. This is allowed because her employer has
Answer:
The correct answer is flex-plans.
Explanation:
These plans allow employees to choose the benefits they prefer or want, instead of being selected by the organization's administration. In this way the employee adapts the benefits package to his needs. For example, an employee in the manufacturing area who has great concern for his well-being or health, might prefer the benefit of additional life insurance.
In short there are many alternative benefits for which they can opt.
The precise advantages of these plans and consequently the reasons why they are becoming increasingly popular are:
1. They allow employees to make relevant decisions about their individual finances and balance requirements with benefit plans.
2. Plans help organizations control costs, especially health. This is because managers can define the maximum amount they will use in each benefit. In other words, flexible payment plans often produce savings for organizations.
3. These plans become instruments to control and keep employees.
For employees, flexibility can be attractive, since in this way they can design their benefits and coverage levels based on their own requirements, therefore, in this sense, benefit plans become an advantage for them.
Bank A has a higher ROA than Bank B. Both banks have similar interest income to asset ratios and noninterest income to asset ratios. We know that
I. Bank A has a higher profit margin than Bank B.
II. Bank A has a higher AU ratio than Bank B.
III. Bank A must have a higher PLL/OI ratio.
A) I only
B) II only
C) I and II only
Answer:
A) I only
Explanation:
We can conclude that bank A will be more profitable than bank B since ROA is a measurement of profitability, and if the banks are operating in a similar manner (both interest income to asset ratios and noninterest income to asset ratios are similar), then the bank with the highest ROA is the most profitable one.
When you take out a mortgage your home becomes the collateral. True or Fals
Answer:
The statement is true.
Explanation:
Mortgage is the long term loan which is issued by the financial institution like banks. These are those loans which are obtained or acquired for a large amount of finance required.
For example, an entrepreneur need a 50 million for the business expansion. Therefore, in this case, usually a house is worth the amount so it is offered as collateral security.
And if entrepreneur fails to make the payment to the lender that is bank, in that case, the bank has an option of claiming the ownership of the property. This result in seizing the mortgage collateral.
Janet and Julie work at ABC Interiors. Janet is a designer who works with clients of ABC on interior design projects. ABC closely supervises all of its designers, and dictates their work schedules. Julie works part-time in the evenings cleaning the offices.Refer to Fact Pattern 31-1. Janet is ABC’sa. employee, agent, and independent contractor.b. employee and agent.c. employee but not agent.d. independent contractor.
Answer:
c. employee but not agent
Explanation:
Agent(legal definition): a person whom act in the name of another yo enter contracts with third parties. Once perform, it is the principal (the party the agent represents) who assumes contracts obligation and benefits.
While an employee has a contract with an employer to provide his workforce. The law will assume someone employee if cannot be determinate otherwise.
In this case Janet works with clients but it do not signs contract with them. Also it is ABC which determinates their works schedules. An Agent has more liberty to search from potential client or from the list of client to negociate on his own and later offer a proposal to the principal.
This is not the case. As it cannot be proveen agent we assume is an employee of ABC
Mark Crane purchased a $1,000 corporate bond five years ago for $1,055. The bond paid 7.0 percent annual interest. Five years later, he sold the bond for $980. Calculate the total return for Mr. Crane’s bond investment. (Do not round intermediate calculations.)
Answer:
Mr Crane's total return on the bond investment was 5.35%
Explanation:
The return on a bond is also known as it yield to maturity (YTM). In order to find a bonds YTM we need to know its present value, future value, coupon payments and number of years. In this case the bond's present value is 1,055 because it was bought at this price, it's future value is 980 because it was sold for 980, its number of years was 5 as it was held for 5 years and its coupon payment was (0.07*1000)=70. Now in order to compute return or ytm we need to put all these values in a financial calculator and compute I
PV= -1055
FV= 980
PMT= 70
N=5
Compute I=5.35
The return on the bond investment was 5.35%
If the market for corporate control were efficient as a governance device, then only __________ would be targets for takeovers. a. firms with unethical top executives b. poorly performing firms c. overvalued firms d. firms earning above-average returns
Answer: Option B
Explanation: In simple words, corporate governance refers to the set of rules and guidelines which are used for operating and managing an organisation. These rules are implemented so that all the actions of the organisation will be ethical and lawful so that no potential threats like lawsuit etc will occur in the future.
Thus, if the corporate control is as efficient as a governance device than any breach of rule will be easily detected ans strict actions would be taken against it. And chances of doing a breach is high for an organisation in which the top executives are unethical.
Hence the correct option is B .
Swifty, Inc. buys 1,400 computer game CDs from a distributor who is discontinuing those games. The purchase price for the lot is $7,000. Swifty will group the CDs into three price categories for resale, as indicated below. Group No. of CDs Price per CD 1. 300 $5 2. 800 10 3. 300 15Determine the cost per CD for each group using the relative sales value method (round to 2 decimal places)
Group 1 _________
Group 2 _________
Group 3 __________
Answer:
Group 1 CD cost per unit = $2.50
Group 2 CD cost per unit = $5.00
Group 3 CD cost per unit = $7.50
Explanation:
Group 1 : 300 CDs x $5 per CD = $1,500
Group 2 : 800 CDs x $10 per CD = $8,000
Group 3 : 300 CDs x $15 per CD = $4,500
total sales price = $1,500 + $8,000 + $4,500 = $14,000
total cost of 1,400 CDs = $7,000
cost per CD relative to sales value = $7,000 / $14,000 = 0.5
Group 1 CD cost per unit = $5 x 0.5 = $2.50
Group 2 CD cost per unit = $10 x 0.5 = $5.00
Group 3 CD cost per unit = $15 x 0.5 = $7.50
Saffexo, a company that manufactures sports goods, hikes the prices of its entire range of athletic shoes. However, the company does not experience a fall in the sales of its shoes following the hike as the consumers continue to buy them. The information given in the scenario indicates that Saffexo has a good _____.
A. brand valuationB. product consistencyC. brand equityD. product mix
Answer: The correct answer is "C. brand equity".
Explanation: The information given in the scenario indicates that Saffexo has a good brand equity.
Because despite an increase in the price of their products people continue to opt for them, this means that for the quality of the product and the value of the brand consumers are willing to pay more for the product.
Describe what is meant by externalities.
Answer:
Externality is when the a third party not involved in production or consumption activities is impacted by these economic activities.
Externality is a form of market failure.
Externality could be postive or negative.
Positive externality - externality is positive when the benefits of economic activities to a third party exceeds its cost. An example am activity that generates positive externality is research and development. For example, research in the medical field has led to the discovery of cures to deadly diseases. The benefit of the research to the society exceeds its cost. Government can promote activities with positive externality by giving subsidies.
Negative externality is when the benefits of economic activities to a third party is less than its cost. An example of negative externality is pollution. A cigarette smoker is harming those around him. The cost to the people around him is more than its benefits. Government discourage activities that generates negative externality by taxation which makes prices higher. This type of tax is known as pigovian tax.
Explanation:
An example of business-to-business sales is selling ________.
a) grocery items to grocery stores
b) automobile insurance to a pet shop owner
c) life insurance to a new parent
d) evening gowns to Oscar award nominees
e) a washing machine to a theatre company
Answer:
a) grocery items to grocery stores
Explanation:
Business -to -business (B2B) sales occur between different companies unlike Business to Consumer (B2C) sales that are between a company and a individual customers. To answer this question, you identify an option that shows that a wholesaler sells goods to a retailer who then sells to a customer which is supply of grocery items to grocery stores.
'Automobile insurance to a pet shop owner' and 'evening gowns to Oscar award nominees' are B2C. And 'a washing machine to a theatre company' is irrelevant
Business-to-business (B2B) sales typically involves sales between two businesses, so selling grocery items to grocery stores represents the most common example of such transactions.
Explanation:
An example of business-to-business sales is selling grocery items to grocery stores. This is because business-to-business (B2B) involves transactions between two businesses, instead of direct sales to consumers. For instance, a producer or wholesaler would sell grocery items to grocery stores, who in turn sell these items to individual consumers. Other examples listed, including selling automobile insurance to a pet shop owner or a washing machine to a theatre company might also be considered B2B sales, but they do not represent the more typical examples of wholesale trade involved in selling tangible goods to businesses.
Learn more about Business-to-business sales here:https://brainly.com/question/39417789
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Sheffield Corp. prepared a 2019 budget for 105000 units of product. Actual production in 2019 was 115000 units. To be most useful, what amounts should a performance report for this company compare? The actual results for 115000 units with a new budget for 115000 units. The actual results for 115000 units with last year’s actual results for 118500 units. It doesn’t matter. All of these choices are equally useful. The actual results for 115000 units with the original budget for 105000 units.
Answer:
The actual results for 115000 units with a new budget for 115000 units.
Explanation:
In order to evaluate Sheffield's performance, you have to evaluate the actual production costs of producing 115,000 units compared to a new production budget for the same 115,000 units.
Budgets are stated in dollars, so if you compare this production level to a smaller production level then you might conclude that there was an unfavorable variance because more money than expected was spent, without considering that the total production had creased. If you compare this actual production to a budget for a larger production you might conclude that you underspent (had a favorable variance) without considering the fewer units produced.