This question includes sales mix complications. Thus a second flexible budget must be prepared to identify sales variances caused by changes to the sales mix. The following is the advised format for tackling this question.

Prepare the fixed budget. All the figures in the fixed budget are based on the original budget assumptions about sales price, sales volume and sales mix. The fixed budget is based on the formula

Budgeted price x budgeted volume x budgeted mix (BP x BV x BM) 

Prepare the flexible budget (flexible budget 1). This budget is based on actual volume sales, but at the original budgeted mix and budgeted prices. As there is no cost information any difference in sales between the fixed and the flexible budget is due to the volume variance and hence this variance is isolated.

Budgeted price x actual volume x budgeted mix (BP x AV x BM)

Prepare a second flexible budget (flexible budget 2). This budget is based on actual volume and the actual sales mix but at budgeted price. As there is no cost information and we are only dealing with the sales budget, the difference in sales between the first and second flexible budgets is due to the sales mix variance and hence this variance is isolated.

Budgeted price x actual volume x actual mix (BP x AV x AM)

Enter the actual figures.

Actual price x actual volume x actual mix (AP x AV x AM)

Find the sales price variances.  This is the difference between flexible budget 2 and actual figures.

                   Sales volume variance    Sales mix variance

                               €22,800 F                       €4805 A

 The following shows how the sales figures are computed:

 b) Prepare a statement reconciling budgeted sales revenue to the actual sales revenue.

         Statement reconciling budgeted sales revenue to actual sales revenue