US CMA Part 1 - SALES VARIANCES..Formulas + Logical Steps + Memory Trick

US CMA Part 1 - SALES VARIANCES..Formulas + Logical Steps + Memory Trick

Sales variance = Difference between *Actual Sales* and *Budgeted Sales* in both $ and Units.

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*1. TOTAL SALES VARIANCE*

*Formula:*  

`Actual Sales $ - Budgeted Sales $`

*Breakdown:*  

`Total Sales Variance = Sales Price Variance + Sales Volume Variance`

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*2. SALES VOLUME VARIANCE* 

_Why sales changed due to selling more/less units_

*Formula 1 - In $:*  

`(Actual Units - Budgeted Units) × Budgeted Selling Price`

*Formula 2 - In Operating Income terms:*  

`(Actual Units - Budgeted Units) × Budgeted Contribution Margin per unit`

*CMA Logic:*  

Isolate the effect of QTY only. Use budgeted price.

*Favorable*: Actual Units > Budgeted Units

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*3. SALES PRICE VARIANCE*

_Why sales changed due to selling at higher/lower price_

*Formula:*  

`(Actual Selling Price - Budgeted Selling Price) × Actual Units Sold`

*CMA Logic:*  

Isolate the effect of PRICE only. Use actual units.

*Favorable*: Actual Price > Budgeted Price

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*4. MARKET SHARE & MARKET SIZE VARIANCES*  

_Used when we have industry data - High level CMA topic_

*Step 1: Break Sales Volume Variance further*

*A. Sales Mix Variance*  

_Selling different product mix than budgeted_  

`[Actual Sales Mix - Budgeted Sales Mix] × Total Actual Units × Budgeted CM per unit`

*B. Sales Quantity Variance*  

_Selling more/less total units than budgeted_  

`[Actual Total Units - Budgeted Total Units] × Budgeted Sales Mix × Budgeted CM per unit`

*Step 2: Break Sales Quantity Variance further*

*A. Market Share Variance*  

_Gained/lost share of the market_  

`[Actual Market Share % - Budgeted Market Share %] × Actual Market Size × Budgeted CM per unit`

*B. Market Size Variance*  

_Market itself grew/shrank_  

`[Actual Market Size - Budgeted Market Size] × Budgeted Market Share % × Budgeted CM per unit`

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*5. LOGICAL STEP-BY-STEP TO SOLVE ANY Q*

**Step** **What to Do** **Formula**

**1** Find **Total Sales Variance** Actual $ - Budget $

**2** Split into **Price + Volume** SPV + SVV

**3** **SPV** = (AP - BP) × AU Check price effect

**4** **SVV** = (AU - BU) × BP Check qty effect

**5** If multi-product: Split SVV into **Mix + Qty** Use CM

**6** If market data given: Split Qty into **Share + Size** Use Market %

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*6. QUICK EXAMPLE*

Budget: 10,000 units @ $50 = $500,000  

Actual: 12,000 units @ $48 = $576,000  

*Total Variance* = $576,000 - $500,000 = *$76,000 F*

*SPV* = ($48 - $50) × 12,000 = *$24,000 U*  

Sold at lower price

*SVV* = (12,000 - 10,000) × $50 = *$100,000 F*  

Sold more units  

Check: $100,000F - $24,000U = $76,000F ✓

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*7. CMA EXAM KEY POINTS*

1. *F = Favorable* = Increases Profit | *U = Unfavorable* = Decreases Profit

2. *Price Variance* uses *Actual Units* 

3. *Volume Variance* uses *Budgeted Price/CM*

4. *Mix variance* = selling more of high CM product = Favorable

5. *Market Share F* = Your company grew faster than market

*8. MEMORY TRICK*

`APBP` - *A*ctual vs *B*udget  

*P*rice uses *P*eriod = Actual Units  

*V*olume uses *V*intage = Budgeted Price