Measuring Marketing

Chapter 108 Sales Volume Variance

Measurement Need

To measure the impact from volume changes.

Solutioni

Sales volume variance is calculated by:

$SV{V}_t=SQ{V}_t+SM{V}_t$

Where

SVV = sales volume variance in time period t

SQVt = sales quantity variance in time period t

SMVt = sales mix variance in time period t

To solve, the marketer first needs to solve for SQV and SMV. These are calculated as follows:

$SQ{V}_t=PPP{S}_t-EPA{S}_t$

Where

SQVt = sales quantity variance in time period t

PPPSt = projected profit based on projected sales in time period t

EPASt = expected profit from actual sales in time period t*

*Note: This is calculated as though profit increases or decreases proportionally with changes in the level of salesii

$SM{V}_{}$