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Variance analysis
Price, volume, and mix
Splitting a change in revenue (or margin) into how much came from selling at different prices, selling different quantities, and selling a different blend of products.
Owned by: Senior analystTest band: Senior analyst
The formula
Price variance = (New price − Old price) × New volume; Volume variance = (New volume − Old volume) × Old price
In practice
Volume variance uses last year's price; price variance uses this year's volume; mix is what is left. If it was all volume, pricing is a lever nobody pulled.
The kind of thing the test asks
- Units sold rose 10% and price rose 5%. Revenue rose about…
- Last year: 1,000 units at $50. This year: 1,100 units at $48. The price variance is…