Price Variance

Price Variance

The materials price variance (Vmp) is computed as follows:

:Vmp = (Actual Unit Cost - Standard Unit Cost) * Actual Quantity Purchased


:Vmp = (Actual Quantity Purchased * Actual Unit Cost) - (Actual Quantity Purchased * Standard Unit Cost).

When the Actual Materials Price is higher than the Standard Materials Price, the variance is said to be unfavorable, since the Actual price paid on materials purchased is greater than the allowed standard. The variance is said to be favorable when the Standard materials Price is higher than the Actual Materials Price, since less money was spent in purchasing the materials than the allowed standard.

Wikimedia Foundation. 2010.

Look at other dictionaries:

  • Direct material price variance — In variance analysis (accounting) direct material price variance is the difference between the standard cost and the actual cost for the actual quantity of material used or purchased. It is one of the two components (the other is direct material… …   Wikipedia

  • direct materials price variance — In a standard costing system, a variance arising as part of the direct materials total cost variance. There are two alternative points at which the materials price variance may be established: when the material is purchased or when it is issued… …   Accounting dictionary

  • Sales Price Variance — The difference between the amount of money a business expects to sell its products or services for and the amount of money it actually sells its products or services for. Sales price variance means that a business will be more or less profitable… …   Investment dictionary

  • sales margin price variance — selling price variance In standard costing, the adverse or favourable variance arising as a result of the difference between the actual sales revenue achieved and the actual sales quantities at budgeted or standard selling prices …   Accounting dictionary

  • selling price variance — See: sales margin price variance …   Accounting dictionary

  • selling price variance — / selɪŋ praɪs ˌveəriəns/ noun the difference between the actual selling price and the budgeted selling price …   Dictionary of banking and finance

  • purchase price variance — noun The difference in price between the amount paid to the supplier and the planned or standard cost of that item. Syn: PPV …   Wiktionary

  • Отклонение продаж по цене (SALES PRICE VARIANCE)  — Разность между плановой и фактической ценой продажи продукции, умноженной на фактический объем реализации …   Словарь терминов по управленческому учету

  • Отклонение прямых материальных затрат по цене (DIRECT MATERIALS PRICE VARIANCE)  — Разность между фактической и нормативной ценой единицы закупленных материалов, умноженное на фактически приобретенное (или использованное в производстве) количество единиц материала …   Словарь терминов по управленческому учету

  • Variance (accounting) — In budgeting (or management accounting in general), a variance is the difference between a budgeted, planned or standard amount and the actual amount incurred/sold. Variances can be computed for both costs and revenues.The concept of variance is… …   Wikipedia

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”