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ACCA Applied Skills · Performance Management · Sales mix and quantity variances

Echo Co budgets sales of X 300 units at a standard contribution of $8 per unit and Y 700 units at $5 per unit. Actual sales were X 400 units and Y 500 units. Using the standard-contribution approach, what is the sales quantity variance?

The sales quantity variance is $590 adverse. Budget average contribution is $5.90 per unit ($5,900 over 1,000 units). Actual total sales were 900 units, 100 below budget, so 100 units at $5.90 gives an adverse quantity variance of $590.

  1. A$590 adverseCorrect
  2. B$590 favourable
  3. C$200 adverse
  4. D$390 favourable

Explanation

Budget contribution is 2,400 + 3,500 = $5,900 on 1,000 units, so the average is $5.90 per unit. Actual units are 900, which is 100 fewer than budget: 100 × $5.90 = $590 A. The mix variance is $390 F and the total is $200 A, which reconciles (-590 + 390 = -200).

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