Question

What are some examples of things that would be impacted by fluctuation in sales mix for a company's outlook

Answer 1

Sales mix is a proportion of different products and services that comprises of total sales of a company.

Things that would be impacted by fluctuations in sales mix from company's outlook is as follows:

1) Change in sales mix can highly impact net income. Increase in sales of products and services which have higher profits than with those which have lower profits can result in higher net income and vice versa.

2) When adjusting sales mix it is of considerable importance to understand the impact on the company's constraint. Some product require more bottleneck time than others, and so may leave little room for production of additional units. Thus even though profit calculation indicate that more of a certain product should be produced it is quite possible that bottleneck issues will prevent the extra units from being manufactured.

3) Sales managers should be aware of fluctuations in sales mix and devise sales commission plan accordingly. Sales commission should be given in such a way to incentivize sale of product or services with higher profits. Otherwise commission given to increase sale of product with lower profits would not benefit the company.