Under this method all variances are calculated on the basis of sales margin /profit. (i) Sales Value Variance or Total Sales Variance = BS – AS Sales Mix Variance = (Revised Standard Sales) – (Standard Sales) It relates to the change in ratio of sales. It is the difference between ‘Revised Standard Sales’ and ‘Standard Sales’. Sales Quantity Variance = Budgeted Selling Price per Unit x (Standard / Budgeted Quantity – Revised Standard Quantity) Sales Quantity Variance = (Budgeted Sales) – (Revised Standard Sales) Revised standard sales (RSS) is the rearrangement of standard sales (SS) in the budgeted ratio. Budgeted sales is calculated in the usual manner (i.e., Budgeted quantity x Standard selling price). It is the difference between ‘Budgeted Sales’ (BS) and ‘Revised Standard Sales’ (RSS).
When more than one product is sold, sales volume variance is subdivided into – Sales Volume Variance = (Budgeted Sales – Standard Sales)īudgeted Sales = Budgeted Sales Volume (Budgeted quantity) x Standard Selling PriceĪctual Sales = Actual Sales Volume (Actual quantity) x Actual Selling Price Sales Volume Variance = Standard Selling Price x (Budgeted Sales Volume – Actual Sales Volume) This variance represents the effect on sales of actual quantity and budgeted quantity. It is the difference between actual sales volume and budgeted sales volume multiplied by standard selling price (budgeted selling price).
Standard Sales = Actual Quantity x Standard Selling Price (Budgeted Selling Price)Īctual Sales = Actual Quantity x Actual Selling Price
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