The-definition.com

Definition

Materials price variance

Materials price variance is the difference between the actual quantity times the actual price and the actual quantity times the standard price for materials.

The materials price variance is computed from the following formula.

(Actual Quantity * actual Price) – (Actual Quantity * Standard Price) = Materials Price Variance (MPV)

The price variance can also be computed by multiplying the actual quantity purchased by the difference between the actual and standard price per unit. The formula is

Actual Quantity * (Actual Price – Standard Price) = Materials Price Variance.

Share it:  Cite

More from this Section

  • Contra-revenue account
    Contra-revenue account is an account that is offset against a revenue account on the income ...
  • Financial accounting
    Financial accounting refers to the field of accounting that provides economic and financial ...
  • Cost accounting
    Cost accounting involves the measuring, recording, and reporting of product costs. From ...
  • Payment date
    On the payment date the company mails dividend checks to the stockholders and records ...
  • Purchase invoice
    Purchase invoice refers to a document that supports each credit purchase. This invoice ...