Examples of Sales Mix Variances

Sales mix variance is based on this formula: (actual units sold * (actual sales mix % budgeted sales mix %) * budgeted contribution margin per unit). Analyzing the sales mix
variance helps a company detect trends in the popularity of its different offerings and
consider the impact on company profits.
Assume that a company expected to sell 600 As and 900 Bs, its expected sales mix would
be 40% A (600/1,500) and 60% B (900/1,500). If the company actually sold 1,000 units of
product A and 2,000 units of product B, its actual sales mix would have been 33.3% A
(1,000/3,000) and 66.6% B (2,000/3,000). The firm can apply the expected sales mix
percentages to actual sales, so A would be (3,000 x 0.4) = 1,200 and B would be (3,000 x
0.6) = 1,800. Based on the budgeted sales mix and actual sales, As sales are under
expectations by 200 units (1,200 budgeted units 1,000 actually sold). On the other hand,
B actually sold 200 fewer units than expected, given Bs budgeted sales mix and actual
sales (1,800 budgeted units 2,000 actually sold).
Assume also that the budgeted contribution margin per unit is $12 per unit for A and $18 for
B. The sales mix variance for A is 1,000 actual units sold * (33.3% actual sales mix % - 40%
budgeted sales mix %) * ($12 budgeted contribution margin per unit), or a ($804)
unfavorable variance. For B, the sales mix variance is 2,000 actual units sold * (66.6%
actual sales mix % - 60% budgeted sales mix %) * ($18 budgeted contribution margin per
unit), or a $2,376 favorable variance.

Read more: Sales Mix Variance Definition |

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