## Purchase Price Variance Solution

STEP 0: Pre-Calculation Summary
Formula Used
Purchase Price Variance = (Actual Cost Incurred-Standard Cost)*Actual Quantity
PPV = (ACI-SC)*ACQ
This formula uses 4 Variables
Variables Used
Purchase Price Variance - Purchase Price Variance is the difference between the actual cost paid for materials or goods and the standard or budgeted cost, multiplied by the actual quantity purchased.
Actual Cost Incurred - Actual Cost Incurred refers to the total expenditure or expenses that have been actually accrued by a business for a particular activity, project, or period.
Standard Cost - Standard Cost is the predetermined or estimated cost that a business expects to incur for producing a unit of product or delivering a service, based on standard pricing and efficiency levels.
Actual Quantity - Actual Quantity refers to the real amount or volume of a specific item, material, product, or resource used, consumed, produced, or acquired within a certain timeframe.
STEP 1: Convert Input(s) to Base Unit
Actual Cost Incurred: 254 --> No Conversion Required
Standard Cost: 230 --> No Conversion Required
Actual Quantity: 95 --> No Conversion Required
STEP 2: Evaluate Formula
Substituting Input Values in Formula
PPV = (ACI-SC)*ACQ --> (254-230)*95
Evaluating ... ...
PPV = 2280
STEP 3: Convert Result to Output's Unit
2280 --> No Conversion Required
FINAL ANSWER
2280 <-- Purchase Price Variance
(Calculation completed in 00.004 seconds)
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## Credits

Created by Keerthika Bathula
Indian Institute of Technology, Indian School of mines, Dhanbad (IIT ISM Dhanbad), Dhanbad
Keerthika Bathula has created this Calculator and 50+ more calculators!
Verified by Aashna
IGNOU (IGNOU), India
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## Purchase Price Variance Formula

Purchase Price Variance = (Actual Cost Incurred-Standard Cost)*Actual Quantity
PPV = (ACI-SC)*ACQ

## What is Purchase Price Variance ?

Purchase Price Variance (PPV) is a financial metric used in cost accounting to assess the difference between the actual cost of purchasing goods or materials and the standard or budgeted cost. It measures the impact of price fluctuations on procurement expenses and helps businesses understand the efficiency of their purchasing processes. The calculation of PPV involves comparing the actual purchase price per unit with the standard purchase price per unit, multiplied by the actual quantity purchased. A positive PPV indicates that goods were purchased at a lower cost than expected, resulting in cost savings, while a negative PPV suggests that goods were acquired at a higher cost than anticipated, potentially impacting profitability. PPV analysis is crucial for businesses to identify cost-saving opportunities, evaluate supplier performance, and make informed decisions regarding procurement strategies.

## How to Calculate Purchase Price Variance?

Purchase Price Variance calculator uses Purchase Price Variance = (Actual Cost Incurred-Standard Cost)*Actual Quantity to calculate the Purchase Price Variance, The Purchase Price Variance is the difference between the actual cost of acquiring goods or materials and the standard or budgeted cost, indicating the impact of price fluctuations on procurement expenses. Purchase Price Variance is denoted by PPV symbol.

How to calculate Purchase Price Variance using this online calculator? To use this online calculator for Purchase Price Variance, enter Actual Cost Incurred (ACI), Standard Cost (SC) & Actual Quantity (ACQ) and hit the calculate button. Here is how the Purchase Price Variance calculation can be explained with given input values -> 2280 = (254-230)*95.

### FAQ

What is Purchase Price Variance?
The Purchase Price Variance is the difference between the actual cost of acquiring goods or materials and the standard or budgeted cost, indicating the impact of price fluctuations on procurement expenses and is represented as PPV = (ACI-SC)*ACQ or Purchase Price Variance = (Actual Cost Incurred-Standard Cost)*Actual Quantity. Actual Cost Incurred refers to the total expenditure or expenses that have been actually accrued by a business for a particular activity, project, or period, Standard Cost is the predetermined or estimated cost that a business expects to incur for producing a unit of product or delivering a service, based on standard pricing and efficiency levels & Actual Quantity refers to the real amount or volume of a specific item, material, product, or resource used, consumed, produced, or acquired within a certain timeframe.
How to calculate Purchase Price Variance?
The Purchase Price Variance is the difference between the actual cost of acquiring goods or materials and the standard or budgeted cost, indicating the impact of price fluctuations on procurement expenses is calculated using Purchase Price Variance = (Actual Cost Incurred-Standard Cost)*Actual Quantity. To calculate Purchase Price Variance, you need Actual Cost Incurred (ACI), Standard Cost (SC) & Actual Quantity (ACQ). With our tool, you need to enter the respective value for Actual Cost Incurred, Standard Cost & Actual Quantity and hit the calculate button. You can also select the units (if any) for Input(s) and the Output as well.
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