ACCA Applied Skills · Performance Management · Sales mix and quantity variances
A company reports an adverse sales mix variance and a favourable sales quantity variance for the period. Which interpretation is most appropriate?
Total volume was above budget, giving the favourable quantity variance, but sales shifted towards products with below-average contribution, giving the adverse mix variance. Price effects are not part of mix or quantity variances.
- ATotal units sold exceeded budget, but the mix shifted towards products with lower than average standard contributionCorrect
- BTotal units sold were below budget, and the mix shifted towards higher-contribution products
- CSelling prices were below standard and total volume was above budget
- DTotal units sold exceeded budget and the mix shifted towards higher-contribution products
Explanation
A favourable quantity variance means more total units were sold than budgeted at the budgeted mix. An adverse mix variance means the proportion of lower-contribution products rose. Price variances are separate from mix and quantity variances, so the price option is wrong.
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