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Sales Volume Variance = (Actual Sales Volume – Budgeted/Expected Sales Volume) x Budgeted/Standard Contribution/ Margin per Unit
DOUBT – Why dont we use the actual contribution margin per unit
The sales volume variance is looking only at the effect on the profit of a change in the volume (as if the contribution per unit remained as budgeted).
Obviously the total actual contribution will also change as a result in changes in the selling price and changes in the costs, but the effect of these changes is looked at separately.
Do watch my free lectures on this because in the lectures I do explain the logic of what we do.
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