Question

What insights might managers gain into the causes of a sales-volume variance by subdividing it into components covered in this chapter 14 ?

answer in your own words

Answer 1

As shown in chapter 14, sales volume variance is Level 2 variance of a static budget and sales mix variance and sales quantity variance are level 3 variance, this level 3 sales quantity variance is further divided into level 4 of market share variance and market size variance. So by subdividing these components into sales mix and sales quantity , manager can have better and to the point knowledge of its sales volume variance that how much variance is due to change in sales mix and sales quantity variance. This sales quantity is further analyzed using change in market share and size variance.