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Question

what is the total salesmix variance in terms of the contribution​ margin? (round intermediary calculations to two decimal​ places.)

Answer

Alright class, let's discuss the topic of total sales mix variance in terms of the contribution margin. This variance refers to the difference between a company's budgeted sales mix and its actual sales mix, which is determined by the percentage of each product sold in relation to overall sales. It's important to note that this sales mix has an impact on the overall profitability of the business, as some products have better profit margins than others. To calculate the total sales quantity variance, we can use the following formula: (Actual Sales-Budgeted) * budgeted sales mix * budgeted contribution Margin. This variance includes each of the company's product lines and contrasts each product's sales with overall sales. By comparing forecasted sales to actual sales, we can determine the profitability of each product or product line. Let's take a look at an example. Suppose a company has two product lines, Standard and Super. The budgeted sales mix for Standard is 2700/ (2700+700) = 0.79 and for Super it is 700/ (2700+700) = 0.21. If the actual sales for Standard and Super are 2800 and 1400, and 700 and 3700 respectively, we can calculate the total sales quantity variance for each product line. For Standard, the variance is [(2800+1400) -(2700+700)] *0.79*500 = 316,000 and for Super it is [(2800+1400) -(2700+700)] *0.21*1070 = 179,760. The total sales mix variance is the sum of both variances, which is 495,760, and it's favorable for the company. If you want to learn more about margin, feel free to check out the resource provided in the description. Thank you for your attention!