Sales Variances Flashcards
what may sales volume variance be split into
mix and quantity (size and share) when two or more products are sold which can be substituted for each other,
(19)
what does mix variance indicate
the effect on profit of changing the mix of actual sales from the standard mix
how do you work out volume variance when there’s more than one product (mix) *
work out the individual volume variances valuing each at their own standard cost, this can be split into quantity variance and mix variances
what do you value quantity variance at when you have more than one product
calculate average contribution per unit then multiply by difference between total budgeted quantity and total actual quantity
what is the difference between sales volume variance and quantity variance *
sales volume variance can be split up into mix and quantity, volume is the sum of the individual volume variances (valued at their own contribution) (19)
is sales volume variance the same when you have more than one product *
yes, just do it for each individual product then add the variances together (remember to value each at their own contribution),
this total volume variance can be split up into quantity and mix variances, quantity variance valued at average contribution per unit not individual, mix valued at individual (20)
(19)
how do you work out market size variance *
budget x,
budget share of actual market (same percentage as before but use larger market) x,
then multiply by standard contribution per unit (av cont per unit if more than one product),
if market has grown then this is favourable (this is lit saying what has the impact should the change of the market size have on sales so doesn’t include if market share has fallen that’s in share variance)
when you work out market size variances for more than one product what do you value the difference at
value at average contribution per unit
how do you work out mix variance when more than one product *
work out average cont per unit using standard profit at standard mix quantities then multiply that by the total number of actual units,
actual individual units times standard cont per individual (not average) unit,
compare these two numbers,
(20)
need to look at mix variance and practice
page 20
difference between market share and size variances
size compares budget to budget share of actual market whereas share compares budget share of actual market to actual (number of units sold),
both valued at av cont per unit
what can quantity variance be split into
size and share
what is the relationship between volume, mix, quantity, share and size variances
volume is total,
volume split up into mix and quantity,
quantity split up into share and size,
(back 20)
