It is the amount of change in contribution as a difference between the actual and budgeted sales values.
Formula for sales volume variance is as below:
(Actual Units Sold – Budgeted Unit Sales) x Standard profit/ Unit
This is where absorption costing is involved.
Also, (Actual Unit Sold - Budgeted Unit Sales) x Standard Contribution/Unit
This is where marginal costing is involved.
Sales Volume Variance is further divided into the following:
i) Sales Mix Variance
ii) Sales Quantity Variance
These help a company to make accurate estimates of the product’s future revenue.
Sales Mix Variance= (Actual Sales at Budget Mix – Budget Sales at budget mix) x Budget CM (or gross profit)/unit
Sales Quantity Variance= (Budgeted Sales – Unit Sales at Standard Mix) x Standard Contribution
The above graph shows the sales volume variances of the Audi, BMW and Mercedes in the year 2010 in a particular region.