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Sales variance.

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › Sales variance.

  • This topic has 3 replies, 2 voices, and was last updated 4 years ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • February 27, 2021 at 12:11 pm #611977
    7fsa
    Participant
    • Topics: 58
    • Replies: 41
    • ☆☆

    Dear john,

    How are you?
    I hope you are doing well,
    Could you help me according to question number 192 which is mentioned in Kaplan Exam kit it says ,
    Jones, monthly absorption costing variance analysis report includes a sales mix variance, which indicates the effect on profit of actual sales mix differing from the budget sales mix. the following data are available
    Product X product Y
    Selling price $12 $11
    Less Variable costs $6 $2
    Fixed costs $2 $3
    Contribution $4 $6
    July sales in units
    Budget 3000 6000
    Actual 2000 8000
    Which one of the following best gives the favorable sales mix variance i july.
    A. $8000
    B. $5333
    C. $4000
    D. $2667
    According to Kaplan the answer is $2667.
    According to my answer is $4000.
    Actually sir, I had checked the answer mentioned back in kaplan but I found that it took into account the amount of fixed cost into calculation of sales mix variance In other words I mean that I multiplied the difference in units by Standard contribution margin but according to kaplan it used Standard profit per unit.
    I know that the company uses Absorption costing techniques but According to my understanding That Fixed Overhead is separated variance.
    Could you clarify when we should use Standard Contribution Margin and when we should use Standard profit I do not speak just about Sales mix variance but about sales variance overall.

    February 27, 2021 at 3:06 pm #612003
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54721
    • ☆☆☆☆☆

    Always (not just in mix variances) the sales variance is calculated using standard contribution if it is marginal costing and standard profit if it is absorption costing.

    Watch my lectures on basic variances to remind yourself of this.

    February 27, 2021 at 5:15 pm #612017
    7fsa
    Participant
    • Topics: 58
    • Replies: 41
    • ☆☆

    Ok dear,
    Thank you so much .

    February 28, 2021 at 9:08 am #612067
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54721
    • ☆☆☆☆☆

    You are welcome 🙂

  • Author
    Posts
Viewing 4 posts - 1 through 4 (of 4 total)
  • The topic ‘Sales variance.’ is closed to new replies.

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