In standard costing, the variance consisting of the difference between the standard operating profit budgeted to be made on the items sold and the actual profits made. The analysis of the profit variance into its constituent sales, direct labor, direct material, and overhead variances provides the management of the organization with information regarding the source of the gains and losses compared to the predetermined standard.
The Sales Margin Mix Variance (Sales Mix Profit Variance) in standard costing measures the financial impact of changes in the actual mix of sales compared to the standard or budgeted sales mix. It isolates the portion of the sales volume variance attributable to variations in the product mix.
Sales volume variance is the difference between the budgeted sales quantity and the actual sales quantity, valued at the standard profit per unit or standard contribution margin per unit. It measures the impact of sales volume fluctuation on the financial performance of a business.
