Sales volume variance is that part of sales value variance which is calculated by taking difference between actual quantity of sales and standard quantity of sales. following is its formula

Sales volume variance

= Standard sales price X ( Actual quantity of sales - Standard quantity of sales )

For example, if we have estimated standard quantity of sales is 1000 unit but we have sold 2000 unit at actual price \$ 10 per unit but standard price is \$ 20 per unit, at that time our sales volume variance is

= \$ 20 X ( 2000 - 1000 )

= \$ 20 X 1000 = \$ 20000  (Favorable)

If standard quantity of sales will be more than actual quantity of sales, then our variance will always unfavorable. Now, we study the reasons of sales volume variance. Sales volume variance happens due to changing in the demand. Flow of demand is from customer. If customer's thinking has been changed due to changing of technology or fashion, he or she will not buy our product. Our actual quantity will be low than our planned quantity of sales. So, we have to understand the need of customer, we have to change our product according to the new fashion and advance quality.
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