effect on profit of selling a different proportionate mix of products than had been budgeted. This variance arises when different products have different CONTRIBUTION MARGINS. The sales mix variance shows how well the department has done in terms of selling the more profitable products while the SALES VOLUME VARIANCE measures how well the firm has done in terms of its sales volume.

Sales Mix Variance = ( Actual Sales of Budgeted Mix - Actual Sales at Actual Mix ) * Budgeted  Contribution Margin Per Unit