question archive How can the concept of a composite unit be used to explain why an unfavorable total sales-mix variance of contribution margin occurs?
How can the concept of a composite unit be used to explain why an unfavorable total sales-mix variance of contribution margin occurs?
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How can the concept of a composite unit be used to explain why an unfavorable total sales-mix variance of contribution margin occurs?
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Answer:
The total sales-mix variance arises from differences in the budgeted contribution margin of the actual and budgeted sales mix. The composite unit concept enables the effect of individual product changes to be summarized in a single intuitive number by using weights based on the mix of individual units in the actual and budgeted mix of products sold.
