The sales-mix variance will be unfavorable when ________.
A) the actual sales mix shifts toward the less profitable units
B) the contribution margin per composite unit for the actual mix is greater than the budgeted mix
C) the actual unit sales are less than the budgeted unit sales
D) the actual contribution margin is less than the static-budget contribution margin

Question

Quizplus · Accepted Answer

The sales-mix variance measures the effect of the deviation of the actual sales mix from the budgeted sales mix on the total profit. The variance is unfavorable when the actual sales mix shifts towards the less profitable units, reducing the overall contribution margin. Therefore, option A is the correct answer. Option B is incorrect because a higher contribution margin per composite unit for the actual sales mix is always favorable, not unfavorable. Option C is incorrect because the sales-volume variance measures the impact of the difference between actual and budgeted unit sales on profit. Option D is incorrect because a comparison of actual and budgeted contribution margins is used to calculate the total contribution margin variance, not the sales-mix variance.

The Sales-Mix Variance Will Be Unfavorable When ________