Analysing change in gross profit margin % by change in revenue mix % and contribution margin %

CFA General
#1

Hi all,

I am trying to explain the difference in the forecast and actual gross margin % by analysing the difference between a) change in the revenue mix b) change in in the % margin of the various products sold.

My question is, should I apply the following logic

(Change in revenue mix % of product Z * Forecast Margin % of product Z ) + (Change in margin % of product Z * Actual revenue mix % of product Z)

OR

(Change in revenue mix % of product Z * Actual Margin % of product Z ) + (Change in margin % of product Z * Forecast revenue mix % of product Z)

I am dealing with a multi-product scenario so I will be calculating the above for all the products.

I greatly appreciate your help on this

Clint

#2

Why you added ACT to FCT figures? Should be subtracted and compare variances on YTD basis. The order is not important, but should be the same formula in all positions.