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 ... 
Unit Sales
A measure of the total sales that a firm earns in a given reporting ...

Why would you use the TTM (trailing twelve months) rather than the data from the ...
Public companies report their yearly financial statements along with an annual report. However, financial professionals are ... Read Full Answer >> 
Why is it important for an investor to understand business accounting?
Investors use financial statements to obtain valuable information used in valuation and credit analysis of companies. Therefore, ... Read Full Answer >> 
What are the business consequences of using FIFO vs. LIFO accounting methods?
If a company uses a firstin, firstout accounting method (FIFO), it's likely that its reported earnings will be higher than ... Read Full Answer >> 
How do you analyze inventory on the balance sheet?
In accounting, inventory represents a company's raw materials, work in progress and finished products. Financial professionals ... Read Full Answer >> 
How are contingent liabilities reflected on a balance sheet
Contingent liabilities need to pass two thresholds before they can be reported in the financial statements. First, it must ... Read Full Answer >> 
How do businesses determine if an asset may be impaired?
In the United States, assets are considered impaired when net carrying value (book value) exceeds expected future cash flows. ... Read Full Answer >>

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. 
Fundamental Analysis
What is Quantitative Analysis?
Quantitative analysis refers to the use of mathematical computations to analyze markets and investments. 
Economics
Explaining Residual Value
Residual value is a measurement of how much a fixed asset is worth at the end of its lease, or at the end of its useful life. 
Personal Finance
Will Tesla Cars Ever Be Affordable?
Tesla cars are highly sought after, but also command a very high price tag. 
Fundamental Analysis
Why Last In First Out Is Banned Under IFRS
We explain why LastInFirstOut is banned under IFRS 
Economics
Understanding Carrying Value
Carrying value is the value of an asset as listed on a company’s balance sheet. Carrying value is the same as book value.