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Cost and Management Accounting · Standard Costing

Sales Variances (Turnover and Margin) for CA Intermediate

Updated 4 October 2026 · Fact-checked

Sales variances explain why actual sales or profit differ from budget. The turnover method uses selling prices; the margin method uses profit per unit. Price variance is AQ × (AP − BP). Volume variance is budgeted price or margin × (AQ − BQ). Volume splits into mix and quantity using revised actual quantity (RAQ).

Understand Sales Variances (Turnover and Margin)

A sales variance compares what you actually sold with what the budget said you would sell. It tells management whether sales moved because of price, because of how many units were sold, or because of which products were sold.

There are two ways to measure it. In the turnover (value) method you work in sales rupees, so budgeted selling price is the weight. In the margin (profit) method you work in profit rupees, so budgeted profit per unit is the weight. The margin method is better when products have different profitability, because selling more of a low-profit product is not as good as it looks in sales value.

The price variance isolates the effect of selling at a price different from budget. The volume variance isolates the effect of selling a different quantity. Volume is then split in two. The mix variance shows the effect of selling products in a proportion different from the budgeted mix. The quantity (sub-volume) variance shows the effect of the total units sold being different from budget, assuming the budgeted mix.

The link between them is simple: price + volume = total variance, and mix + quantity = volume. The mix variance needs two or more products. For a single product, volume variance is the same as quantity variance.

Sign rule: for sales, a higher actual sales value or profit than budget is Favourable (F). A lower one is Adverse (A).

Key rules to remember

Sales value variance (turnover)
Actual sales − Budgeted sales = (AQ × AP) − (BQ × BP)
Equals price variance + volume variance. Favourable if actual sales exceed budget.
Sales price variance
AQ × (AP − BP)
Same in both methods. AQ is actual quantity sold, AP actual price, BP budgeted price.
Sales volume variance (value)
BP × (AQ − BQ)
Uses budgeted selling price. Equals mix variance + quantity variance.
Sales mix variance (value)
BP × (AQ − RAQ)
RAQ is actual total quantity split in the budgeted ratio. Calculated product by product, then added.
Sales quantity variance (value)
BP × (RAQ − BQ)
Effect of total units differing from budget at the budgeted mix.
Revised actual quantity (RAQ)
RAQ of a product = Total actual quantity × (BQ of that product ÷ Total BQ)
Total of RAQ equals total of AQ.
Total sales margin variance
Actual profit − Budgeted profit, where actual profit = Actual sales − Standard cost of actual sales
Equals margin price variance + margin volume variance.
Sales margin volume variance
Budgeted margin per unit × (AQ − BQ)
Budgeted margin per unit = BP − standard cost per unit.
Sales margin mix variance
Budgeted margin per unit × (AQ − RAQ)
Sum over all products.
Sales margin quantity variance
Budgeted margin per unit × (RAQ − BQ)
Sum over all products. Mix + quantity = margin volume variance.

How to solve Sales Variances (Turnover and Margin) questions

Use this order for any sales variance question, whichever method the question asks for.

  1. 1Read whether the question wants the turnover (value) method or the margin (profit) method. If standard cost is given and profit is asked, use margin.
  2. 2Tabulate budget and actual for each product: quantity, selling price and, for margin, standard cost and margin per unit.
  3. 3Calculate budgeted and actual sales value (or profit) and find the total variance first.
  4. 4Calculate the price variance for each product using AQ × (AP − BP). Mark F or A.
  5. 5Calculate the volume variance for each product using BP (or budgeted margin) × (AQ − BQ). Mark F or A.
  6. 6If mix and quantity are asked, find RAQ for each product, then compute mix as weight × (AQ − RAQ) and quantity as weight × (RAQ − BQ).
  7. 7Total each variance. Check that price + volume = total, and mix + quantity = volume.
  8. 8Write the answer in a small table with F or A against each figure, and add a one-line comment on the main cause.

Quickest way: Table-first method with the two checks

When to use it: Use it in the exam for any multi-product sales variance, MCQ or written.

  1. Write one row per product with BQ, AQ, RAQ, BP (or budgeted margin) and AP.
  2. Work out the volume variance as (AQ − BQ) × weight, mix as (AQ − RAQ) × weight and quantity as (RAQ − BQ) × weight in the same row, so you use one set of numbers.
  3. Run the checks: mix + quantity = volume, and price + volume = total. If a check fails, fix the error before moving on.
  4. For MCQs, first spot the total. If total actual sales equal budget, value variance is nil, so price and volume must be equal and opposite. Also, if actual mix equals budgeted mix, mix variance is nil and volume equals quantity variance.
  5. In written answers, show the formula, the substitution and the F or A label for each product. Step marks are given even if the final figure has a small slip.

Common mistakes in Sales Variances (Turnover and Margin)

  • Using actual price in the volume or mix variance.

    Students carry the actual price from the price variance into every line.

    Fix: Price variance uses AP − BP. Volume, mix and quantity always use the budgeted price (or budgeted margin per unit).

  • Using selling price instead of margin per unit in the margin method.

    The formulas look identical to the value method, so the weight is not changed.

    Fix: In margin variances, use budgeted profit per unit = BP − standard cost. Underline 'profit' in the question to remind yourself.

  • Calculating RAQ wrongly, for example using the budgeted total instead of the actual total.

    Students confuse the quantity that is revised with the ratio that is kept.

    Fix: RAQ = total actual units × budgeted ratio. Check that total RAQ equals total AQ.

  • Reversing the sign for sales (treating higher sales as adverse).

    Cost variances are taught first, where higher actual is adverse.

    Fix: For sales and profit, actual above budget is Favourable. Say it aloud once before you start.

  • Taking the margin price variance as different from the value price variance.

    Students think the margin method needs a new price formula.

    Fix: Both use AQ × (AP − BP). Actual margin changes only because actual price changes against a fixed standard cost.

  • Not checking that components add up.

    Students compute each line independently and stop.

    Fix: Always verify price + volume = total and mix + quantity = volume.

Worked examples

Example 1

Turnover method. Budget: Product A 400 units at ₹50, Product B 600 units at ₹30. Actual: Product A 500 units at ₹48, Product B 400 units at ₹35. Calculate sales value, price, volume, mix and quantity variances.

Show the solution
  1. Budgeted sales = (400 × 50) + (600 × 30) = 20,000 + 18,000 = ₹38,000.
  2. Actual sales = (500 × 48) + (400 × 35) = 24,000 + 14,000 = ₹38,000. Sales value variance = ₹0.
  3. Price variance: A = 500 × (48 − 50) = ₹1,000 A. B = 400 × (35 − 30) = ₹2,000 F. Total = ₹1,000 F.
  4. Volume variance: A = 50 × (500 − 400) = ₹5,000 F. B = 30 × (400 − 600) = ₹6,000 A. Total = ₹1,000 A.
  5. Check: 1,000 F + 1,000 A = 0, which matches the value variance.
  6. RAQ: total actual units = 900. Budget ratio is 400 : 600, so RAQ of A = 360 and of B = 540.
  7. Mix variance: A = 50 × (500 − 360) = ₹7,000 F. B = 30 × (400 − 540) = ₹4,200 A. Total = ₹2,800 F.
  8. Quantity variance: A = 50 × (360 − 400) = ₹2,000 A. B = 30 × (540 − 600) = ₹1,800 A. Total = ₹3,800 A.
  9. Check: 2,800 F + 3,800 A = 1,000 A, which equals the volume variance.

Answer: Sales value variance nil; price ₹1,000 F; volume ₹1,000 A; mix ₹2,800 F; quantity ₹3,800 A.

Example 2

Margin method. Use the data of the previous question, with standard cost per unit of ₹40 for A and ₹24 for B. Calculate total sales margin, margin price, margin volume, margin mix and margin quantity variances.

Show the solution
  1. Budgeted margin per unit: A = 50 − 40 = ₹10. B = 30 − 24 = ₹6.
  2. Budgeted profit = (400 × 10) + (600 × 6) = 4,000 + 3,600 = ₹7,600.
  3. Actual profit (at standard cost) = A: 500 × (48 − 40) = 4,000. B: 400 × (35 − 24) = 4,400. Total = ₹8,400.
  4. Total sales margin variance = 8,400 − 7,600 = ₹800 F.
  5. Margin price variance = AQ × (AP − BP) = ₹1,000 A for A and ₹2,000 F for B, so ₹1,000 F.
  6. Margin volume variance: A = 10 × (500 − 400) = ₹1,000 F. B = 6 × (400 − 600) = ₹1,200 A. Total = ₹200 A.
  7. Check: 1,000 F + 200 A = 800 F. Correct.
  8. RAQ is A 360 and B 540. Margin mix variance: A = 10 × (500 − 360) = ₹1,400 F. B = 6 × (400 − 540) = ₹840 A. Total = ₹560 F.
  9. Margin quantity variance: A = 10 × (360 − 400) = ₹400 A. B = 6 × (540 − 600) = ₹360 A. Total = ₹760 A.
  10. Check: 560 F + 760 A = 200 A, which equals the margin volume variance.

Answer: Total sales margin variance ₹800 F; price ₹1,000 F; volume ₹200 A; mix ₹560 F; quantity ₹760 A.

Exam tips

  • Write the budget and actual table first. Most marks are lost by picking the wrong number from the question, not by wrong formulas.
  • Read carefully whether the question asks for sales value variances or sales margin variances. The same data can give different volume, mix and quantity figures.
  • Always label F or A and show the two cross-checks. Examiners give step marks for this.
  • For MCQs, test quick logic first: same total actual and budget sales means nil value variance; same mix means nil mix variance.
  • Add a short comment, for example that a favourable mix came from selling more of the higher-margin product, when the question asks you to interpret.

Practice questions from Standard Costing

Sales Variances (Turnover and Margin) in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Sales Variances (Turnover and Margin): frequently asked questions

What is the difference between sales value variance and sales margin variance?

Sales value variance compares actual and budgeted sales rupees. Sales margin variance compares actual and budgeted profit, using the standard cost of the units. Margin variances are more useful when products have different profitability.

How do I calculate the sales price variance?

Use AQ × (AP − BP), where AQ is actual quantity sold, AP actual selling price and BP budgeted selling price. It is the same in the value and margin methods. A higher actual price gives a favourable variance.

How are sales mix and sales quantity variances related to volume variance?

Volume variance is the sum of mix and quantity variances. Mix shows the effect of selling products in a different proportion. Quantity shows the effect of the total units sold differing from budget at the budgeted mix.

Is sales margin volume variance the same as sales value volume variance?

No. The value method uses budgeted selling price as the weight. The margin method uses budgeted profit per unit. The quantity differences (AQ − BQ) are the same, but the rupee result differs.