Variance analysis
Price, volume and mix variances
Split a revenue variance into what customers paid, how much they bought, and what they chose to buy.
Learning objectives
- Decompose a revenue variance into price, volume and mix effects
- Apply a stated formula order so the three effects add up to the total
- Interpret a mix shift between high- and low-priced products
"Revenue was SAR 2.61m below budget" tells management nothing about what to do. Did prices fall? Did fewer customers buy? Or did customers buy as many items as planned, but cheaper ones? Each answer leads to a different action: pricing, marketing or range and store layout.
Price-volume-mix (PVM) analysis splits the revenue variance into those three effects. Here you analyse Rawdah's store channel in March FY2026, by category: units in thousands, average selling prices in SAR, revenue in SAR thousands. Rawdah Home Retail Co. is a fictional retailer; all figures are illustrative.
Included with a Formula Quest membership
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