mix effect
Also called: mix variance, volume, mix and price effects, volume effect, price effect
The part of a change caused by a shift in the shares of items with different rates, such as more low-margin lessons in the total. Computed as actual volumes at plan rates minus actual total volume at the plan average.
When actual results differ from the plan, the gap can be split into parts that add up exactly:
- Volume effect = (actual units − plan units) × plan average rate.
- Mix effect = Σ actual unitsᵢ × plan rateᵢ − actual units × plan average rate.
- Price (rate) effect = Σ actual unitsᵢ × (actual rateᵢ − plan rateᵢ).
The mix effect is the subtle one: the average rate can fall even though no single rate changed, simply because more of the cheaper item was sold. It is the weighted mean at work: the same items with different weights give a different average.
The pairing matters. Volume is valued at plan rates, price at actual volumes; that convention makes the parts sum to the total gap with nothing left over.
Example
Plan: 6,000 English lessons at 190 and 2,000 maths at 150 (1,440,000; average 180). Actual: 5,600 English at 185 and 2,800 maths at 150 (1,456,000).
- Volume: (8,400 − 8,000) × 180 = +72,000.
- Mix: 5,600 × 190 + 2,800 × 150 − 8,400 × 180 = −28,000.
- Price: 5,600 × (185 − 190) = −28,000.
- Check: 72,000 − 28,000 − 28,000 = +16,000.
Common mistakes
- Blaming price for a mix shift. A lower average with unchanged prices is mix.
- Mixing the pairing. Valuing volume at actual rates leaves a remainder that belongs to no part.
- Skipping the check. The parts must add up to the gap; if they don't, a formula is wrong.
Learn it in the course
- Splitting a total · Split a total into parts that add up exactly: sums of squares and R², plan vs actual as volume + mix + price, and a change in savings as contributions + growth.
- Weighted mean and mix · Σwx/Σw, why a pooled rate is not the mean of rates, mix-adjusted rates, pooled variance and pooled p̄, the cost of capital, PERT estimates and weighted scoring.