Track changes in sales mix over time with variance analysis.
Sales mix is an important consideration in the world of product and financial management. Changes in sales mix can signify changes in consumer demand, which is helpful for new product development. Finding the sales mix variance can help to both track changes in the sales mix over time as well as identify growth areas. It can also help to explain away declines and increases in product revenue, which is very important when trying to diagnose budgeting problems.
Instructions
1. Determine the current sales mix. You will need to know the sales for all major product groups. For instance, for XYZ comnpany let's say there are 2 different products. Product 1 is selling $4,000 in sales and Product 2 is selling $6,000 in sales per month.
2. Calculate the percentage mix. Divide the sales for each product by the total. In this example Product 1 represents 40 percent ($4,000/$10,000) and Product 2 represents 60 percent ($6,000/$10,000).
3. Track the change from month to month. Let's say in the following month, sales of Product 1 increased to $10,000, and Product 2 sales increased to $20,000.
4. Calculate the new percentage. The new sales mix of Product 1 is 33 percent ($10,000/$30,000) and 66 percent for Product 2 ($20,000/$30,000).
5. Calculate the variance in sales mix. Product 1 percentage of total sales changed from 40 to 33 percent. Divide the change by the previous month. The calculation is 7 divided by 40 equals 17.5 percent. This is the one-month variance for Product 1. Product 2 sales went from 60 percent of sales to 66 percent of sales. The calculation is 6 divided by 60, or 10 percent sales variance.
Tags: sales Product, percent sales, Calculate percentage, calculation divided, changes sales, changes sales over