The sum of the change in units for each product multiplied by the difference between the budgeted contribution margin and the budgeted average unit contribution margin is called the:
A)market share variance
B)sales mix variance
C)overall sales variance
D)market size variance

Question

Quizplus · Accepted Answer

The formula described in the question is that of the sales mix variance. This variance measures how changes in the mix of products sold affect overall profitability, by comparing the budgeted contribution margin with the actual contribution margin based on the actual mix of products sold. It helps to identify whether changes in sales volumes of different products are proportionate or not. Therefore, the best choice is B, sales mix variance.

The Sum of the Change in Units for Each Product