Question

For 2020, your company planned on selling 10,000 units of its highest priced product - Fish Sticks, which is also its highest margin product, and they planned on selling 5,000 units of its lowest priced, lowest margin product - cat food. However, for some unexplained reason, actual sales of Fish Sticks were 5,000 units and actual sales of Cat Food were 10,000 units. Your company has a:

Answer 1

Answer: Negative Sales Mix Variance

Explanation:

With regards to the above question, the company has a negative sales mix variance. First and foremost, we should know that the sales mix variance simply has to do with the difference between the actual sales mix and the budgeted sales mix of a company or organization.

From the question, there'll be negative sales mix variance and this will bring about a reduction in the revenue of the company as the budgeted sales will be lesser than actual sales. Therefore, Profit also reduces.