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Hi,
I would like to ask sales margin contribution variance is referred to (actual contribution per unit -std contribution per unit) x actual sales unit
OR
(actual sales volume- budgeted sales volume) x std contribution per unit?
thanksThe sales margin contribution variance is the total sales variance, which is (actual sales x (actual selling price less standard cost)) – (budgeted sales x (standard selling price less standard cost)).
This can then be analysed into the sales volume and sales price variances.This is all explained in my free lectures on variances for Paper PM (and for Paper MA (was F2) also, because it is revision of Paper MA).
Hi John,
may I just ask why the actual sales x (actual selling price less standard cost)) rather than actual selling price less actual cost? Hence we using the actual price,I am trying to understand the logic behind it. many thanks Anna
Differences between actual costs and standard costs are dealt with in all the cost variances.
The sale variances are concerned only with differences in the amount sold and the sales price – not with differences in the costs.
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