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Morning dear John, with your lectures and notes i have completed whole syllabus and i am preety confident on everything after budget chapters. i still have to revise few earlier chapters.
I am aware of all the small things your told in variance lectures and i can solve questions nicely. but I am not sure about what Sales QTY variance shows. I know the formula – acutal sales at std. profit/contribuition p.u at std. mix – budgeted sales at std profit/contribution p.u at std. mix.what does it actually reflects ? what the adverse/favorable sales QTY mean ?
it looks like it shows how changes in sales QTY affect the profit per unit. but then thats what the sales volume variance shows which is total of sales mix and sales qty.
please clarify it
The quantity variance is showing the effect on the profit of selling more (or less) units in total. It assumes that the mix between the products remains the same. If the mix is different than this will effect the total profit as well, but this is looked at in the mix variance.
thanks , now i am clear now. QTY variance ( only occurs when multiple products are involved) is same as sales volume variance when one product is involved. and
when the multiple products involved , sales Qty variance specifically shows how changes in qty affect profit or contribution and volume variance shows both affect of mix and changes in Qty on profit.
Thanks
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