How to Calculate Volume & Mix in Financial Reporting

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Volume and mix are essential components to any business. Volume is the number of sales of an item. The mix is the number of products and services offered. Calculating the mix and volume is a simple process. Every sale lists what product was sold and in what quantity. This information is useful for inventory control, profit calculations and production schedules.

  • Perform an inventory count. For businesses that have merchandise, record the number of products and types in stock. Use these numbers as a starting point for sales.

  • Use sales receipts to match sold products and amounts to inventory and purchase orders. Computer databases help organize the data, making calculations easier.

  • Track sales over time of each product. Purchase orders will show new inventory being purchased and created. As new products are added or removed to the inventory, the mix increases and decreases.

  • Perform a second inventory. Compare the sales receipts, purchase orders and existing inventory. Add all new purchases and subtract all sales.

  • Record the transactions. The mix is the number of different products still in inventory at the start of the next cycle. The volume is the number of products sold during the previous inventory cycle.

Tips & Warnings

  • Existing and carry-over inventory are used for future volume estimates. The number of purchases during the cycle of various products fluctuates.
  • Too high a mix of products can increase costs associated and reduce volume of sales of a particular item. Too low a mix will drive customers to another company or vendor. Strike the balance between mix and volume to meet sales expectations.

References

  • Photo Credit Jupiterimages/Photos.com/Getty Images
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