Aliengear Inc. is a small company that specializes in the manufacture and sale of gaming computers. Currently, the company offers two models of gaming PCs:
- Turbox – A professional gaming PC with a water-cooling system priced at $2,500
- Speedo – An entry level gaming PC with standard fan cooling priced at $1,000
Aliengear budgeted sales of 1,600 units of Turbox and 2,400 units of Speedo in the last year. The standard variable costs of a single unit of Turbox and Speedo were set at $1,500 and $750 respectively.
The sales team at Aliengear managed to sell 1,300 units of Turbox and 3,700 units of Speedo during the last year.
Calculate the sales mix variance.
Step 1: Calculate the standard mix ratio
Standard mix ratio:
40% Turbox* and 60% Speedo**
* 1,600 / (1,600 + 2,400) % = 40% Turbox
** 100% – 40% = 60% Speedo
Step 2: Calculate the sales quantities in proportion to the standard mix
Total sales during the period: 1,300 Turbox + 3,700 Speedo = 5,000 units
Unit Sales at Standard Mix:
Sales of Turbox in standard mix @ 40% of 5,000 = 2,000 units
Sales of Speedo in standard mix @ 60% of 5,000 = 3,000 units
Step 3: Calculate the difference between actual sales quantities and the sales quantities in standard mix
