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Respected Sir,
I am not able to understand the test Questions (3 and 4) in chapter 14. I know the answers to them are given at the end of the notes. Could you please elaborate them for my understanding.Thank you.
For the sale quantity variance you compare the budget quantities (7,000 of X and 3,000 of Y), with the actual total quantity at standard mix. The actual total quantity is 15,000 and if they were at standard mix then it would be 7/10 x 15,000 = 10,500 of X, and 3/10 x 15,000 = 4,500 of Y.
You cost both of these out at the standard contribution per unit for each product.For the sales mix variance, you compare the actual quantities of each (8,000 of X and 7,000 of Y) with the standard mix for the actual total (10,500 of X and 4,500 of Y, as above).
Again you cost them at standard contribution per unit for each product.
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