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Sales volume variance

The sales volume variance measures the effect of actual units sold differing from budgeted units, valued at the standard unit profit or contribution appropriate to the costing system. Absorption systems commonly use standard profit per unit; marginal systems use standard contribution. A revenue-based volume variance is a different measure and must be labelled. In multi-product situations, sales volume effects can be split into mix and quantity.

Worked example

Budgeted sales are 1,000 units and actual 1,100. With standard contribution $8, the marginal volume variance is $800 favourable.

Common mistake

Do not multiply by selling price when the task asks for the profit or contribution volume effect.

Where it appears in your exams

QualificationExamRelationshipPeriod
ACCA MA Direct September 2026–June 2027
ACCA PM Direct September 2026–June 2027
FIA FMA Direct September 2026–June 2027