Hello, The sales variance I learnt had two parts 1. Sales Value variances (5 variances) Analysed using selling price per unit. 2. Sales Margin Variances (5 variances) analysed using Contribution/ profit for MC or AC respectively.. But here you taught that sales price variance is solved using SP and other variances using Contribution/ Profit. I want to know if the variances you taught in this lecture are the only ones gonna come in the exam and if we are asked to find out Total Sales margin variance what should we use selling price or contribution/profit and which 2 variances put together will give us total sales margin variance ? Thank you so much.

My lectures cover everything that can be asked in the exam.

The syllabus makes no reference to ‘sales margin’ variances. Instead they are referred to as ‘sales volume variance’ which is the total of the ‘sales mix’ and ‘sales quantity’ variances, as I explain in my lectures. These variances use the standard contribution or standard profit (depending on whether it is absorption or marginal costing).

Because we are separating out the effect of a change in the total quantity and a change in the mix – so we look at the effect of each of them on their own.

I don’t quite understand your response to Jareerabedin’s question. Are you saying that the total sales margin variance is the same as the sales price variance? If so, why are they then separated in the question??

I had thought it is: = 180*(6-3) + 150*(4-4) + 170*(1-6) = 540 + 0 + (850) = 310 (Adverse).

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apoorvakudva says

Hello,

The sales variance I learnt had two parts

1. Sales Value variances (5 variances) Analysed using selling price per unit.

2. Sales Margin Variances (5 variances) analysed using Contribution/ profit for MC or AC respectively..

But here you taught that sales price variance is solved using SP and other variances using Contribution/ Profit.

I want to know if the variances you taught in this lecture are the only ones gonna come in the exam and if we are asked to find out Total Sales margin variance what should we use selling price or contribution/profit and which 2 variances put together will give us total sales margin variance ?

Thank you so much.

John Moffat says

My lectures cover everything that can be asked in the exam.

The syllabus makes no reference to ‘sales margin’ variances. Instead they are referred to as ‘sales volume variance’ which is the total of the ‘sales mix’ and ‘sales quantity’ variances, as I explain in my lectures. These variances use the standard contribution or standard profit (depending on whether it is absorption or marginal costing).

kingSuper says

Hi John,

I was confused, for the sales volume variance, how do you determine whether to use standard profit or actual profit?

Thanks in advance.

John Moffat says

For the volume variance we always use standard profit (or contribution if marginal costing).

fahad198803 says

John, I was just confused, why in Quantity variance, we compared standard mix with Budgeted mix instead actual Mix ?

Thanks

John Moffat says

Because we are separating out the effect of a change in the total quantity and a change in the mix – so we look at the effect of each of them on their own.

fahad198803 says

Thanks John

John Moffat says

You are welcome 馃檪

John Moffat says

You are welcome 馃檪

alie2018 says

Thanks John. Great lecture. The sales volume variance can be split into sales mix and sales quantity variance.

jareerabedin says

thank you so much sir

John Moffat says

You are welcome 馃檪

jareerabedin says

Sir,

are sales price variance and sales volume variance together called sales margin variance?

jareerabedin says

or is it just the sales price variance?

thank you

John Moffat says

Just the sales price variance 馃檪

michael01 says

Thanks for the good work John.?

I don’t quite understand your response to Jareerabedin’s question. Are you saying that the total sales margin variance is the same as the sales price variance? If so, why are they then separated in the question??

I had thought it is:

= 180*(6-3) + 150*(4-4) + 170*(1-6)

= 540 + 0 + (850)

= 310 (Adverse).

John Moffat says

Sorry but I don’t understand my response either!! (It was six months ago and I must have misunderstood the question)

You are correct – it is the total variance.

michael01 says

Ow, thanks a lot for the clarity.