Sales Quantity Variance
Sales quantity variance is somewhat similar to the sales volume variance and it is the measure of the change in the contribution margin or the profit per unit volume of the sales that results due to the change in the number of actual sales quantity of the product as compared to the budgeted quantity. This change in the profit occurs due to the difference between the anticipated quantity of sales and the actual quantity of sales during that accounting period. The formula of Sales Quantity Variance can be explained as under:-
Sales quantity variance = Budgeted Sales – Unit Sales in Standard product mix x Standard Contribution Margin
As it is explained earlier sales quantity variance is an extension or a version of the sales volume variance that describes the impact of high or low sales quantity on the profit or contribution margin earned by the business entity as compared to the budget. There is a major difference between sales quantity variance and the sales volume variance that is the former is calculated by using the actual sales volume of the products where as the later is calculated by using the volume of the products in standard mix. While calculating the sales quantity variance the difference between the actual and standard product mix is always ignored.
Favorable figure of sales quantity mix indicates that the business entity will be able to sell higher number of products as compared to the number of products anticipated in budget where as unfavorable figure suggests that the actual quantity of the sales of the product will be low as compared to the anticipation.
Other Related Accounting Articles:
- What is Sales Volume Variance?
- Sales Mix Variance
- Sales Price Variance
- Direct Material Usage Variance
- Materials Quantity Variance Definition
- Profit Velocity Analysis
- Direct Material Price Variance
- Standard Costing
- Importance of Variance
- Importance of Variance Analysis
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