I'm trying to figure out the correct methodology for analyzing price/mix variances and an impact on a weighted average price per unit (not your typical impact to sales or profit margin). In particular, I've found two calculations for Mix variance but can't seem to figure out mathematically why one is correct over the other. Screenshot of the two outputs of each method
Method 1
(Actual Product A Mix % - Budgeted Product A Mix %) * (Actual Product A price per unit - Weighted Average price per unit of all Products)
I apply similar equations for product B and C.
Method 2
(Actual Product A Mix % - Budgeted Product A Mix %) * (Actual Product A price per unit)
They both give similar answers at a total level but give different answers when trying to figure out a single product's contribution to the variance. Method 1's results seem intuitively correct to me, but I don't quite understand the math behind it and why it would be.
Any help would be much appreciated! Thanks so much.