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QUESTION; A company has budgeted on selling 7000 units of product X at a selling price of $30 per unit and 3000 units of product Y at a selling price of $40 per unit. The standard contribution per unit is 30% of selling price for both products.
They actually sell 8000 units of X and 7000 units of Y . What is the sales mix variance?
The standard contribution for X is $9 (30% x $21), and for Y is $12 (30% x $40).
The actual mix gives a standard contribution of (8,000 x $9) + (7,000 x $12) = $156,000
For the actual total sales of 15,000, the standard mix would be 7/10 x 15000 = 10,500 X’s, and 3/10 x 15000 = 4,500 Y’s.
So the standard mix at standard contribution is (10500 x 9) + (4500 x 12) = 148,500.So the sales mix variance is the difference of 156000 – 148500 = 7500 (F)
(You had better check my arithmetic – I am away from home on vacation until Thursday without a calculator 🙂 )
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