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Sales Mix

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In addition to the assumptions introduced in chapter 7 for basic cost-volume-profit (CVP) analysis, one additional assumption must be specified: The sales mix is expected to remain steady. Sales mix refers to the relative proportions in which a company’s products are sold. For example, suppose a deli sells 2 sandwiches for every bag of chips sold for every 3 soft drinks sold. The sales mix in units for the deli is 2 to 1 to 3. The sales mix is expressed in standard form as 2 : 1 : 3. In other words, out of every 6 items sold, the company typically sells 2 sandwiches, 1 bag of chips, and 3 soft drinks. This group of 6 items is often known as a bundle. It is important to note that it may take multiple customers to sell all items in the bundle, however, on average, a company can rely on its product mix in the short run. Understanding a company's sales mix is helpful for budgeting, for managing a company's inventory levels, and for determining breakeven and target profit levels.
Sales mix can be stated two different ways--in terms of units and in terms of sales dollars. To illustrate, suppose Jama Giants produces two products: cakes and pies. Sales mix in units differs from sales mix in revenue dollars because both the selling price of cakes and pies and the number of pies and cakes sold differ. The company has provided the following expected sales information for its products for the month of

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