ACCA Applied Skills · Performance Management · Sales mix and quantity variances
Marlow Ltd budgeted to sell 6,000 units in total with a budgeted total contribution of $90,000. Actual sales were 5,400 units in total, sold in a different mix from budget. What is the sales quantity variance based on contribution?
The sales quantity variance is $9,000 adverse. Sales were 600 units below the budget total, and each unit is valued at the budgeted average contribution of $15 ($90,000 over 6,000 units). The actual mix is irrelevant to this variance.
- A$9,600 adverse
- B$9,000 favourable
- C$8,100 adverse
- D$9,000 adverseCorrect
Explanation
Budgeted average contribution = 90,000 / 6,000 = $15 per unit. Sales quantity variance = (5,400 - 6,000) x $15 = $9,000 adverse. The mix change does not affect this variance because it uses total units and the budget average. $9,600 would wrongly use an actual average contribution.
Did you get it right without looking?
One question tells you little. A timed set on Sales mix and quantity variances shows your real accuracy, how long you take and where you lose marks.
More Sales mix and quantity variances questions
- Fargo Co budgeted to sell Alpha 800 units (standard profit $5 per unit) and Beta 200 units (standard profit $15 per unit). Actual sales were…
- 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…
- Which statement about the sales quantity variance is correct?
- A company reports an adverse sales mix variance and a favourable sales quantity variance for the period. Which interpretation is most approp…
- Gamma Co budgets sales of C 500 units (standard profit $4), D 300 units (standard profit $10) and E 200 units (standard profit $15). Actual …