Sales Mix Variance

Ioannis Inc., produces and sells two types of countertop ovensthe toaster oven and the convection oven. Budgeted and actual data for the two models are shown below.

Budgeted Amounts:

		Toaster Oven		Convection Oven		Total
Sales:
($1,000 25,000)		$25,000,000
($500 15,000)				$7,500,000		$32,500,000
Variable expenses		6,250,000		1,500,000		7,750,000
Contribution margin		$18,750,000		$6,000,000		$24,750,000

Actual Amounts:

		Toaster Oven		Convection Oven		Total
Sales:
($1,000 25,500)		$25,500,000
($500 13,500)				$6,750,000		$32,250,000
Variable expenses		6,375,000		1,350,000		7,725,000
Contribution margin		$19,125,000		$5,400,000		$24,525,000

Required:

1. Calculate the sales mix variance.

$--- Favorable

2. What if actual units sold of the toaster oven increased? How would that affect the sales mix variance?

It would become more unfavorable or less favorable.

What if actual units sold of the convection oven increased? How would that affect the sales mix variance?

It would become less unfavorable or more favorable.

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1. See Example 18.8.

2. If everything else remains the same and you have more units of the toaster oven, how will that impact the sales mix?

If everything else remains the same and you have more units of the convection oven, how will that impact the sales mix?

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