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Performance Management · Sales mix and quantity variances

How to Calculate Sales Quantity Variance in ACCA PM

Updated 11 October 2026 · Fact-checked

The sales quantity variance shows the profit effect of selling more or fewer total units than budgeted, assuming the budgeted mix. Calculate it as (actual total units sold − budgeted total units) × budgeted average margin per unit. A positive result is favourable. It is one part of the sales volume variance.

Understand Calculating Sales Quantity Variance

A company sells several products. The budget fixes how many units of each to sell and the margin on each. In practice you rarely hit the budget exactly. You sell a different total, and you sell a different split between products.

The sales volume variance captures both effects together. Examiners often want it split in two. The sales quantity variance answers one question: what is the effect of selling more or fewer units in total, if the mix had stayed as budgeted? The sales mix variance answers the other: what is the effect of the mix changing?

To isolate the quantity effect, you treat every unit as an average unit. You use the budgeted average margin per unit, which is total budgeted margin divided by total budgeted units. Selling 100 units more than budget, at an average margin of ₹60, is worth ₹6,000 favourable. It does not matter which products those extra units were.

Use the same margin basis throughout. If the business uses marginal costing, use contribution. If it uses absorption costing, use standard profit. The question will tell you which one. Quantity variance plus mix variance always equals the sales volume variance.

Key rules to remember

Budgeted average margin per unit
Total budgeted margin ÷ total budgeted units
Margin means standard profit under absorption costing or contribution under marginal costing. Use the one the question uses.
Sales quantity variance (units method)
(Actual total units sold − budgeted total units) × budgeted average margin per unit
Positive is favourable, negative is adverse.
Sales quantity variance (alternative)
(Actual total units at budget mix − budgeted units) × standard margin, summed over products
Gives the same answer. Useful as a cross-check.
Sales mix variance
(Actual units sold − actual total units at budget mix) × standard margin per unit, summed over products
Shows the effect of the change in mix only.
Sales volume variance
Sales mix variance + sales quantity variance = (actual units × standard margin) − budgeted margin
Use this as your check that the split adds up.

How to solve Calculating Sales Quantity Variance questions

Follow the same sequence for every sales quantity question. It also sets you up for the mix variance, which is often asked alongside it.

  1. 1Identify the margin basis: standard profit (absorption costing) or contribution (marginal costing).
  2. 2List budgeted units and standard margin per unit for each product. Total the budgeted units.
  3. 3Calculate total budgeted margin, then divide by total budgeted units to get the budgeted average margin per unit.
  4. 4Total the actual units sold across all products.
  5. 5Find the difference: actual total units − budgeted total units.
  6. 6Multiply the difference by the budgeted average margin per unit.
  7. 7Label the answer favourable (F) if actual total units exceed budget, or adverse (A) if they fall short.
  8. 8If asked for it, calculate the mix variance and check that mix + quantity = sales volume variance.

Quickest way: Total units gap × average margin

When to use it: Use when the question asks only for the sales quantity variance and gives budgeted units and margins for all products.

  1. Add up budgeted units and actual units. Take the gap.
  2. Compute total budgeted margin: Σ(budget units × margin). Divide by total budgeted units.
  3. Multiply the gap by that average margin and write F or A.
  4. Skip the product-by-product working. Only do it if the mix variance is also required.

Common mistakes in Calculating Sales Quantity Variance

  • Using each product's own margin instead of the budgeted average margin

    Students carry the method over from the sales volume variance, which uses individual margins.

    Fix: For the quantity variance, always divide total budgeted margin by total budgeted units and use that single average.

  • Using the actual average margin instead of the budgeted one

    The actual mix is in front of you, so it is tempting to use it.

    Fix: The quantity variance holds the mix at budget. Use only budgeted figures for the margin.

  • Mixing contribution and profit

    Questions give both selling price and full standard cost, and students pick the wrong margin.

    Fix: Check whether the business uses absorption or marginal costing. Use that margin in every variance in the question.

  • Getting the sign wrong

    Students subtract budget from actual in one variance and actual from budget in another.

    Fix: Always take actual − budget. A positive result is favourable. Sales variances here are on profit, so more units is favourable.

  • Assuming quantity and volume variances are the same thing

    Both relate to the number of units sold.

    Fix: Volume = mix + quantity. Quantity ignores the mix change. Always check the sum against the volume variance.

  • Forgetting the variance is about total units, not each product

    Students compare actual with budget for each product and sum the results.

    Fix: Quantity only compares totals. Product-level differences belong in the mix variance.

Worked examples

Example 1

A company budgets to sell 600 units of A (standard profit ₹40 per unit) and 400 units of B (standard profit ₹90 per unit). Actual sales were 500 units of A and 600 units of B. Calculate the sales quantity variance, the sales mix variance and the sales volume variance.

Show the solution
  1. Budgeted total units = 600 + 400 = 1,000.
  2. Budgeted total profit = (600 × ₹40) + (400 × ₹90) = ₹24,000 + ₹36,000 = ₹60,000.
  3. Budgeted average profit per unit = ₹60,000 ÷ 1,000 = ₹60.
  4. Actual total units = 500 + 600 = 1,100.
  5. Quantity variance = (1,100 − 1,000) × ₹60 = ₹6,000 F.
  6. Actual total at budget mix: A = 1,100 × 60% = 660; B = 1,100 × 40% = 440.
  7. Mix variance: A (500 − 660) × ₹40 = ₹6,400 A; B (600 − 440) × ₹90 = ₹14,400 F; net ₹8,000 F.
  8. Check volume variance: actual at standard profit = (500 × ₹40) + (600 × ₹90) = ₹20,000 + ₹54,000 = ₹74,000. Less budget ₹60,000 = ₹14,000 F.
  9. Quantity ₹6,000 F + mix ₹8,000 F = ₹14,000 F. This agrees.

Answer: Sales quantity variance ₹6,000 favourable; sales mix variance ₹8,000 favourable; sales volume variance ₹14,000 favourable.

Example 2

A business budgets 1,500 units of X (contribution $12 per unit) and 500 units of Y (contribution $28 per unit). Actual sales were 1,200 units of X and 700 units of Y. Calculate the sales quantity variance and explain how it relates to the sales volume variance.

Show the solution
  1. Budgeted total units = 1,500 + 500 = 2,000.
  2. Budgeted total contribution = (1,500 × $12) + (500 × $28) = $18,000 + $14,000 = $32,000.
  3. Budgeted average contribution per unit = $32,000 ÷ 2,000 = $16.
  4. Actual total units = 1,200 + 700 = 1,900.
  5. Quantity variance = (1,900 − 2,000) × $16 = $1,600 A.
  6. Mix variance: actual total at budget mix is X 1,425 and Y 475. X (1,200 − 1,425) × $12 = $2,700 A; Y (700 − 475) × $28 = $6,300 F; net $3,600 F.
  7. Volume variance: actual at standard contribution = (1,200 × $12) + (700 × $28) = $14,400 + $19,600 = $34,000. Less budget $32,000 = $2,000 F.
  8. Check: $1,600 A + $3,600 F = $2,000 F. This agrees.

Answer: Sales quantity variance $1,600 adverse. The overall sales volume variance is $2,000 favourable, because a favourable shift towards the higher-contribution product (mix $3,600 F) outweighs the shortfall in total units.

Exam tips

  • Read whether the question wants profit or contribution before you start. It changes every number.
  • In a constructed-response question, show the average margin working clearly. Marks are given for method even if you slip on arithmetic.
  • Always do the volume variance check: mix + quantity must equal the volume variance. It catches most errors quickly.
  • In objective test questions, one wrong figure scores zero, so watch the sign and check whether the options include the mix or volume variance as traps.
  • When asked to comment, say what the variance means for the business. For example, a quantity shortfall points to weak overall demand or sales effort, not a change in product split.

Practice questions from Sales mix and quantity variances

Calculating Sales Quantity Variance: frequently asked questions

What is the formula for sales quantity variance in ACCA PM?

Sales quantity variance = (actual total units sold − budgeted total units) × budgeted average margin per unit. The average margin is total budgeted margin divided by total budgeted units. Use contribution or standard profit depending on the costing system.

What is the difference between sales volume variance and sales quantity variance?

The sales volume variance measures the effect of selling a different number of units of each product than budgeted, at individual margins. It splits into the sales mix variance and the sales quantity variance. The quantity variance covers only the change in total units, at the budgeted mix.

Should I use contribution or profit for the sales quantity variance?

Use whichever the question's costing system uses. Under marginal costing, use contribution. Under absorption costing, use standard profit. Keep the same basis for the mix and volume variances.

Can the sales quantity variance be adverse when the sales volume variance is favourable?

Yes. If total units fall short of budget but the mix moves towards higher-margin products, the mix variance can outweigh the adverse quantity variance. Example 2 on this page shows exactly this.