Performance Management · Sales mix and quantity variances

How to Calculate Sales Mix Variance in ACCA PM

Updated 11 October 2026 · Fact-checked

Sales mix variance compares the units you actually sold of each product with the same total actual units split in the budgeted mix. Multiply each difference by the standard profit (or contribution) per unit. Favourable means you sold more of higher-margin products. It is part of the sales volume variance.

Understand Calculating Sales Mix Variance

A business that sells several products plans to sell them in a certain proportion. This is the budgeted mix. In practice, customers buy a different proportion. The sales mix variance measures the effect on profit of that change in proportion, ignoring whether the total sold was higher or lower than planned.

To isolate the mix, you ask: if we had sold our actual total units but in the budgeted proportions, how many of each product would that be? Then compare that with what we actually sold. If you sold more of a product than the budget mix implies, and it earns a high margin, the variance is favourable.

Each difference is valued at the standard profit per unit. If the question uses absorption costing, use standard profit. If it uses marginal costing, use standard contribution. Do not mix the two. Use whichever the budget is built on.

The mix variance works with the sales quantity variance. Quantity compares total actual units in budget mix with total budgeted units. Mix compares actual units with actual total in budget mix. Together they equal the sales volume variance. That is a useful check on your arithmetic.

Mix variances only make sense when products are related, such as sold to the same customers or as substitutes. Managers must also remember that a favourable mix may come from price cuts or from stock-outs of other products. The number alone does not say why.

Key rules to remember

Actual total in budgeted mix: Actual total units × (budgeted units of product ÷ budgeted total units); Work out this figure for every product first. The column should add up to the actual total units.
Sales mix variance (per product): (Actual units sold − Actual total in budgeted mix) × standard profit or contribution per unit; Positive result is favourable. Negative is adverse. Use standard profit for absorption costing and standard contribution for marginal costing.
Sales quantity variance (per product): (Actual total in budgeted mix − Budgeted units) × standard profit or contribution per unit; This is the companion variance. It shows the effect of selling more or fewer units in total.
Check: Sales mix variance + Sales quantity variance = Sales volume variance; Sales volume variance = (Actual units − Budgeted units) × standard profit or contribution per unit, summed over products.
Average profit method (total level): Total mix variance = Standard profit of actual units sold − (Actual total units × budgeted average profit per unit), where budgeted average profit per unit = budgeted total profit ÷ budgeted total units. Equivalently, Σ (Actual units − Actual in budget mix) × (standard profit per unit − budgeted average profit per unit); Use standard contribution instead of standard profit if the budget is on a marginal costing basis. The total equals the total of the per-product method, because the differences sum to zero, so the average profit term adds nothing. For example, in the first worked example the average profit is $14, so $17,000 − (1,100 × $14) = $1,600 favourable. Follow the method the question or examiner uses.

How to solve Calculating Sales Mix Variance questions

This method works for any sales mix variance question. Set it out as a table so the numbers can be checked.

1Identify the costing basis. Decide whether to use standard profit per unit (absorption) or standard contribution per unit (marginal). Write the figure for each product.
2List budgeted units for each product and the budgeted total. Work out each product's budgeted share of the total.
3List actual units sold for each product and the actual total.
4Calculate actual total units in the budgeted mix: actual total × budget share, for each product. Check it adds up to the actual total.
5For each product, subtract the actual total in budget mix from the actual units sold. These are the mix differences. They should sum to zero.
6Multiply each difference by the standard profit or contribution per unit. Label each result favourable (F) if positive and adverse (A) if negative. Add them for the total mix variance.
7If asked, calculate the sales quantity variance and check that the two add to the sales volume variance.
8Write one sentence of comment if the question asks for interpretation, such as which products were over- or under-sold relative to the budget mix.

Quickest way: Table with a zero-sum check

When to use it: Use it in Section C or in OT cases when you must produce the mix variance quickly and reliably.

Draw four columns: Actual units, Actual in budget mix, Difference, Standard profit per unit.
Fill the budget mix column using shares from the budget. Check it totals the actual units.
Calculate the differences. They must total zero. If not, fix the error before moving on.
Multiply each difference by its standard profit and add up. The sign of the total is the answer.
Only calculate the quantity variance if asked. Use it to check against the volume variance.

Common mistakes in Calculating Sales Mix Variance

Comparing actual units with budgeted units instead of actual units in budget mix.
Students mix up the mix variance with the sales volume variance, since both start from budgets.
Fix: Always create the 'actual total in budget mix' column first. The mix variance uses it, never the raw budget units.
Using standard contribution when the question uses absorption costing, or the reverse.
Students use the first unit figure they see.
Fix: Check the costing basis in the question. Use standard profit per unit under absorption costing, and standard contribution per unit under marginal costing.
Using actual profit or selling price per unit rather than standard.
Students want to value the variance at what really happened.
Fix: Mix is a volume-type variance, so use standard figures. Price effects belong in the sales price variance.
Differences not summing to zero.
Rounding of budget shares or applying the wrong total.
Fix: Use fractions where possible. Always check that the budget-mix column totals the actual units and that the differences sum to zero.
Getting the sign wrong.
Students reverse the subtraction.
Fix: Always do actual minus budget-mix. A favourable result means the sales were more heavily weighted to the products with higher unit margins, so check the sign makes sense.
Treating the mix variance as a verdict on performance.
Students forget that mix is influenced by pricing, availability and demand.
Fix: Add a short comment: say which products drove the variance and note possible causes such as price changes or stock shortages.

Worked examples

Example 1

A company budgeted to sell 600 units of product A (standard profit $10 per unit) and 400 units of product B (standard profit $20 per unit). It uses absorption costing. Actual sales were 500 units of A and 600 units of B. Calculate the sales mix variance, the sales quantity variance and the sales volume variance.

Show the solution

Budgeted total = 600 + 400 = 1,000 units. Budget mix: A 60%, B 40%.
Actual total = 500 + 600 = 1,100 units.
Actual total in budget mix: A = 1,100 × 60% = 660 units. B = 1,100 × 40% = 440 units.
Mix differences: A = 500 − 660 = −160 units. B = 600 − 440 = +160 units. These sum to zero.
Mix variance: A = −160 × $10 = $1,600 adverse. B = +160 × $20 = $3,200 favourable. Total = $1,600 favourable.
Quantity variance: A = (660 − 600) × $10 = $600 favourable. B = (440 − 400) × $20 = $800 favourable. Total = $1,400 favourable.
Check: standard profit on actual sales = 500 × $10 + 600 × $20 = $17,000. Budgeted profit = 600 × $10 + 400 × $20 = $14,000. Volume variance = $3,000 favourable. $1,600 + $1,400 = $3,000.

Answer: Sales mix variance $1,600 favourable. Sales quantity variance $1,400 favourable. Sales volume variance $3,000 favourable.

Example 2

A business budgeted sales of 300 units of X (standard profit $8 per unit) and 200 units of Y (standard profit $15 per unit). Actual sales were 360 units of X and 140 units of Y. Calculate the sales mix variance and the sales quantity variance, and comment.

Show the solution

Budgeted total = 500 units. Budget mix: X 60%, Y 40%.
Actual total = 360 + 140 = 500 units.
Actual total in budget mix: X = 500 × 60% = 300. Y = 500 × 40% = 200.
Mix differences: X = 360 − 300 = +60. Y = 140 − 200 = −60. These sum to zero.
Mix variance: X = 60 × $8 = $480 favourable. Y = −60 × $15 = $900 adverse. Total = $420 adverse.
Quantity variance: actual total equals budgeted total, so the actual total in budget mix equals budget for each product. The variance is nil.
Check: standard profit on actual sales = 360 × $8 + 140 × $15 = $2,880 + $2,100 = $4,980. Budgeted profit = $2,400 + $3,000 = $5,400. Volume variance = $420 adverse, equal to the mix variance.

Answer: Sales mix variance $420 adverse. Sales quantity variance nil. The total volume was on target, but sales shifted from the higher-profit product Y to the lower-profit product X, so profit fell.

Exam tips

In OT questions you often need only one product's mix variance. Still build the budget-mix figure first, because it is the step most errors come from.
Read whether the question gives standard profit or standard contribution per unit. The method is the same, but the values differ.
In Section C, show the table with the budget-mix column. Method marks are available even if one figure is wrong.
Use the volume variance check to catch errors. If mix plus quantity does not equal volume, find the mistake before writing the answer.
When asked to comment, name the products that were over-sold or under-sold against the budget mix and suggest one reason, such as price changes or stock shortages.

Practice questions from Sales mix and quantity variances

Calculating Sales Mix Variance: frequently asked questions

Should I use standard profit or standard contribution in the sales mix variance?

Use the one that matches the costing basis of the budget. With absorption costing use standard profit per unit. With marginal costing use standard contribution per unit. Mixing them gives wrong answers.

What is the difference between sales mix and sales quantity variances?

The mix variance compares actual units with actual total units in the budgeted mix. The quantity variance compares that actual total in budget mix with the budgeted units. Together they make up the sales volume variance.

What does the average profit method do?

Some questions value the mix variance using the average standard profit per unit across the budget. It gives the same total mix variance as the product-by-product method, so follow the method the question sets out.

Is a favourable sales mix variance always good news?

No. It means the mix moved towards higher-margin products compared with the budget. It may have come from discounting other products or running short of stock. Look at the cause before judging performance.