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Dear Tutor,
I have a question regarding variances. I am looking at BPP PM 24-25 and there are two questions, Q275 Clear Co and Q277 Block Co, where there is a requirement for calculating the Sales Mix Variances.
For Clear Co the total sales mix variance is calculated as Actual Total Sales in Standard Mix (calculated as w1 on the answer sheet) and then Actual Total Sales in Actual Mix is subtracted to find the variance (and then multiplied by contribution).
However On Block Co Actual Total Sales On Actual Mix is first and then subtracted from Actual Total Sales in Standard Mix (there is a w1 afterwards) and then multiplied by the profit margin.
So my question is if there is an identifier on the Question set that goes first. I briefly looked at your notes but I must have missed something.
Actual Total Sales in Standard Mix
minus
Actual Total Sales in Actual Mix, multiplied by the contribution
Compared to
Actual Total Sales in Actual Mix
subtracted from
Actual Total Sales in Standard Mix, multiplied by the profit margin.The only thing that is different is contribution or profit
It depends on what you are given in a question
Contribution or profit
Or figures that come to Contribution or profit
So if you have fixed costs in the question it’s probably profit…
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