why is it wrong to calculate sales volume variance for more than one product separately and adding together to get the volume variance for the period? why do we have to get average contribution from all the products and do it together for sales volume variance? because when when we calculate material variances for more than one,we do it separately and its not wrong, we dont have to get average price for all the materials and do it together.
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variance analysis
10y ago#1For the volume variance, you can do it for each product separately and add them together!
It will give the same answer and how you get the answer does not matter in the exam (and I prefer to do them separately and add them up!)
budgeted budgeted actual
sales price sales
x 5,000 20 5,800
y 3,000 35 2,700
z 2,000 40 1,800
i am getting different variances when i do separately i get 1,000 adverse, that is:
x 6,400 favourbale
y 4,200 adverse
z 3,200 adverse
but the other method gives me 8,750 adverse
could you explain where i am going wrong
contribution is 40 percent of the standard sales price
10y ago#4I don't know how you are getting 8570 adverse
The correct sales volume variance is 1,000 (adverse).
(And it can be analysed into the sales quantity variance which is 3420 (favourable) and the sales mix variance which is 4420 (adverse)).
now i understand, i have been thinking sales volume variance and sales quantity variance is the same. i will go through the notes and read about it. thank you very much sir :)
10y ago#6You are welcome :-)
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