DEFINITION of 'Sales Mix Variance'
The difference in the quantity of customer purchases of each product or service compared to the quantities that a business expected to sell. Sales mix variance compares the actual mix of sales to the budgeted mix. The metric can be used for analyzing the company's profitability since some products and services usually have higher profit margins than others.
Sales mix variance is the sum of all product line calculations as follows:
Sales Mix Variance = (actual sales at the expected mix  expected sales at expected mix) * expected contribution margin per unit.
or
Sales Mix Variance = total units actually sold * (actual sales mix %  expected sales mix %) * expected contribution margin per unit
INVESTOPEDIA EXPLAINS 'Sales Mix Variance'
Analyzing sales mix variance can help a company detect trends in the popularity of its different offerings and compare the results on profit. For example, If a company expected to sell 600 As and 900 Bs, its expected sales mix would be 40% A (600/1,500) and 60% B (900/1,500). If the company actually sold 1,000 units of product A and 2,000 units of product B, its actual sales mix would have been 33.3% A (1,000/3,000) and 66.6% B (2,000/3,000).
We can use the expected mix on the actual sales to get comparable numbers. So A would be 3000 x 0.4 = 1200 and B would be 0.6 x 3000 = 1,800. Now we can see A was under expectations by 200 units and B exceeded by 200 units. Using the expected contribution margin per unit  lets use $12 per unit for A and $18 for B  you find an unfavorable variance of $2,400 for A and a favorable variance of $3,600 for B, so the total sales mix variance is $1,200.
Using the second equation from above: 3,000*(0.33333.04)*$12 = $2,400

PriceToSales Ratio  PSR
A valuation ratio that compares a company’s stock price to its ... 
Sales Price Variance
The difference between the amount of money a business expects ... 
Sales Mix
The relative amounts purchased of each of the products or services ... 
Organic Sales
The term "organic sales" refers to revenue generated from within ... 
Sales Per Square Foot
A popular sales metric used in the retailing industry. Sales ... 
Gross Sales
A measure of overall sales that isn't adjusted for customer discounts ...

Fundamental Analysis
Great Expectations: Forecasting Sales Growth
Predicting sales growth can be something of a black art, unless you ask the right questions. 
Fundamental Analysis
Measuring Company Efficiency
Three useful indicators for measuring a retail company's efficiency are its inventory turnaround times, its receivables and its collection period. 
Investing Basics
Understanding The Cash Conversion Cycle
Find out how a simple calculation can help you uncover the most efficient companies. 
Markets
How To Use PriceToSales Ratios To Value Stocks
Take a look at how this effective ratio can be influenced by certain critical factors. 
Investing
Doing More With Less: The SalesPerEmployee Ratio
If used properly, this ratio can give you insight into a company's productivity and financial health. 
Investing
What does DDP Mean?
Delivery duty paid (DDP) is a shipping term specifying that the seller is responsible for all costs associated with delivery of the goods to the buyer. It is usually used when goods are exported ... 
Fundamental Analysis
What is a good interest coverage ratio?
Learn the importance of the interest coverage ratio, one of the primary debt ratios analysts use to evaluate a company's financial health. 
Fundamental Analysis
What is a bad interest coverage ratio?
Understand how interest coverage ratio is calculated and what it signifies, and learn what market analysts consider to be an unacceptably low coverage ratio. 
Active Trading Fundamentals
What is liquidity risk?
Learn how to distinguish between the two broad types of financial liquidity risk: funding liquidity risk and market liquidity risk. 
Technical Indicators
What is a good gearing ratio?
Understand the meaning of the gearing ratio, how it is calculated, the definition of high and low gearing, and how they reflect relative financial stability.