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Accounts and finance are most important part in the field of business. It holds the whole economy of the business through several analytical processes. These analytical processes play a significant role to determine companies’ financial status, business strategy, probability for profits and how to invest for best results.
To know effects of sales mix on income one must know about sales mix perfectly. It is such an analytical process that calculates the ratios for sales corresponding to each and every product individually with respect to its total sales in that organisation. So you can understand that its effect plays a significant role in the business field.
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Bit about this subject
When a business organisation produces different types of product, then the proportional path of sales in each of those types to the wholesale amount is referred to as the corresponding mixes. It is generally expressed in percentage form.
For example – a business organisation produces three different products A, B and C. Suppose the amount of sale for A is Ax for B is By for C is Cz, in a specific time period. So the total amount of sale of that company is Ax + By + Cz.And sales mix value of A, B and C is A/ (Ax + By + Cz), B/ (Ax + By + Cz), and C/(Ax + By + Cz) respectively.
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Importance
Through this analytical calculation, organisation can identify the most profitable product and least profitable ones. Increasing the production of larger sales mixes and reducing that of lower mixes, a business can earn more profit. Thus it can affect the revenue income of a company in a positive manner even without changing selling prices or total production quantity.
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