
Sales mix and quantity variances explains how to calculate, identify and explain sales mix and quantity variances and explains the relationship between the sales volume variances and the sales mix and quantity variances.
Sales Mix and Quantity Variances
The sales volume variance consists of two variances – the sales mix variance and the sales quantity variance. They are useful “where management is in a position to control the sales mix.”
a) Calculate, identify the cause of, and explain sales mix and quantity variances.
The sales mix and sales quantity variances “are only meaningful when management can control the proportions of the products being sold.”
Note: The sales mix variance occurs when “the proportions of the various products sold are different from those in the budget.”To calculate the sales mix variance:
- Identify the total actual quantity of units sold
- Divide the total quantity of sales into the standard mix
- For each product, the difference between the actual quantity and the standard quantity is the mix variance
- Apply the standard profit per unit for the material to convert the mix variance into a money value
- The total materials mix variance is the total of the sales mix variance
To calculate the sales quantity variance:
Calculate the total quantity of materials that should have been used for the actual number of units manufactured
- Calculate the weighted average standard profit per unit
- Calculate the difference between the actual total sales and the budgeted total sales
- Convert this into a money value by applying the weighted average standard profit per unit of sale
b) Identify and explain the relationship of the sales volume variances with the sales mix and quantity variances.
The sales volume variance consists of two variances – the sales mix variance and the sales quantity variance. They are useful “where management is in a position to control the sales mix.”
Resources Used
- BPP’s ACCA F5 Performance Management Study Text
- ACCA F5 Syllabus and Study Guide
- Open Tuition’s ACCA F5 Performance Management Study Materials
- Acowtancy Free ACCA F5 Course
Related Posts
- My ACCA Exams Journey
- Preparing for ACCA F5 Performance Management
- A1: Specialist Cost and Management Accounting Techniques | Activity Based Costing (ACCA F5)
- A2: Specialist Cost and Management Accounting Techniques | Target Costing (ACCA F5)
- A3: Specialist Cost and Management Accounting Techniques | Life Cycle Costing (ACCA F5)
- A4: Specialist Cost and Management Accounting Techniques | Throughput Accounting (ACCA F5)
- A5: Specialist Cost and Management Accounting Techniques | Environmental Accounting (ACCA F5)
- B1: Decision Making Techniques | Relevant Cost Analysis (ACCA F5)
- B2: Decision Making Techniques | Cost Volume Profit Analysis (ACCA F5)
- B3: Decision Making Techniques | Limiting Factors (ACCA F5)
- B4: Decision Making Techniques | Pricing Decisions (ACCA F5)
- B5: Make or Buy and Other Short Term Decisions | Pricing Decisions (ACCA F5)
- B6: Dealing With Risk and Uncertainty in Decision Making | Pricing Decisions (ACCA F5)
- C1: Budgeting and Control | Budgetary Systems and Types of Budget (ACCA F5)
- C2: Budgeting and Control | Quantitative Analysis in Budgeting (ACCA F5)
- C3: Budgeting and Control | Standard Costing (ACCA F5)
- C4: Budgeting and Control | Material Mix and Yield Variances (ACCA F5)