Page 139 - DMGT202_COST_AND_MANAGEMENT_ACCOUNTING

Cost and Management Accounting

Notes Sales Mix Variance (A) = ` 30 ( 500 – 400) = ` 3,000 (Favourable)
(B) = ` 25 ( 100 – 200) = ` 2,500 (Adverse)

= ` 500 (Favourable)

From the above calculations, what is obviously understood?
If the mixes are equivalent to each other, the sales volume variance is equivalent to the sales mix
variance. It means that, there would not be a sales mix variance
Sales Sub-usage Variance:
Sales Sub-usage Variance = Standard Price (Revised Standard Quantity – Actual
Quantity)
Sales Sub Usage Variance (A) = ` 30 (400 – 400) = 0
(B) = ` 25 (200 – 200) = 0

0

There is no sub-usage variance.

Verifi cation:
1. Sales Value Variance = Sales Price Variance + Sales Volume Variance
900(F) = 400(F) + 500(F)
2. Sales Volume Variance = Sales Mix Variance + Sales Sub-usage Variance
500(F) = 500(F) + 0

Self Assessment

Choose the correct answer:

6. Variance is identified in between
(a) Standard and budgeted fi gures
(b) Standard and actual fi gures

(c) Budgeted figures and actual
(d) None of the above
7. Variance is/are

(a) Cost variance
(b) Revenue variance
(c) Expense variance
(d) Both (a) & (b)

8. Cost variance is classifi ed into
(a) Material variance
(b) Labour variance
(c) Expense variance
(d) (a), (b) & (c)

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