Answer (C) is correct . The sales volume variance can be divided into the sales quantity variance and the sales mix variance. The sales quantity variance is the change in contribution margin caused by the difference between actual and budgeted volume, assuming that budgeted sales mix, unit variable costs, and unit sales prices are constant. Thus, it equals the sales volume variance when the sales mix variance is zero. In a multiproduct firm, the sales mix variance is a variance caused by a sales mix that differs from that budgeted. For example, even when the sales quantity is exactly as budgeted, an unfavorable sales mix variance can be caused by greater sales of a low-contribution product at the expense of lower sales of a high-contribution product.
Answer (A) is incorrect because The sales price variance is a separate variance and is not a component of the sales volume variance.
Answer (B) is incorrect because The sales price variance is a separate variance and is not a component of the sales volume variance.
Answer (D) is incorrect because The production volume variance is a fixed overhead variance. It is not related to the sales volume variance.
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