A favourable sales volume variance for a substitute product in a multiple-product firm does NOT necessarily imply a favourable sales mix variance for that substitute product.

Question

Quizplus · Accepted Answer

A favourable sales volume variance means that more units of a product were sold than expected, but it says nothing about the proportion of sales compared to other products in the firm. Therefore, a favourable sales volume variance for a substitute product does not necessarily imply a favourable sales mix variance for that substitute product.

A Favourable Sales Volume Variance for a Substitute Product in a Multiple-Product