Price variance - Wikipedia

Price variance (Vmp) is a term used in cost accounting which denotes the difference between the expected cost of an item (standard cost) and the actual cost ... Pricevariance FromWikipedia,thefreeencyclopedia Jumptonavigation Jumptosearch Thisarticleneedsadditionalcitationsforverification.Pleasehelpimprovethisarticlebyaddingcitationstoreliablesources.Unsourcedmaterialmaybechallengedandremoved.Findsources: "Pricevariance" – news ·newspapers ·books ·scholar ·JSTOR(November2007)(Learnhowandwhentoremovethistemplatemessage) Pricevariance(Vmp)isatermusedincostaccountingwhichdenotesthedifferencebetweentheexpectedcostofanitem(standardcost)andtheactualcostatthetimeofpurchase.Thepriceofanitemisoftenaffectedbythequantityofitemsordered,andthisistakenintoconsideration.Apricevariancemeansthatactualcostsmayexceedthebudgetedcost,whichisgenerallynotdesirable.Thisisimportantwhencompaniesaredecidingwhatquantitiesofanitemtopurchase. Formula[edit] Pricevarianceiscalculatedbythefollowingformula: Vmp=(Actualunitcost-Standardunitcost)*ActualQuantityPurchased or Vmp=(ActualQuantityPurchased*ActualUnitCost)-(ActualQuantityPurchased*StandardUnitCost). WhentheActualMaterialsPriceishigherthantheStandardMaterialsPrice,thevarianceissaidtobeunfavorable,sincetheActualpricepaidonmaterialspurchasedisgreaterthantheallowedstandard.ThevarianceissaidtobefavorablewhentheStandardmaterialsPriceishigherthantheActualMaterialsPrice,sincelessmoneywasspentinpurchasingthematerialsthantheallowedstandard.[1] References[edit] ^analysis,FullBioEvanTarverhas6+yearsofexperienceinfinancial;Author,5+Yearsasan;editor;Tarver,copywriterLearnaboutoureditorialpoliciesEvan."Whatispricevarianceincostaccounting?".Investopedia.Retrieved2021-09-02.{{citeweb}}:|last2=hasgenericname(help) Thiseconomics-relatedarticleisastub.YoucanhelpWikipediabyexpandingit.vte Retrievedfrom"https://en.wikipedia.org/w/index.php?title=Price_variance&oldid=1045205010" Categories:PricingEconomicsandfinancestubsHiddencategories:CS1errors:genericnameArticlesneedingadditionalreferencesfromNovember2007AllarticlesneedingadditionalreferencesAllstubarticles Navigationmenu Personaltools NotloggedinTalkContributionsCreateaccountLogin Namespaces ArticleTalk English Views ReadEditViewhistory More Search Navigation MainpageContentsCurrenteventsRandomarticleAboutWikipediaContactusDonate Contribute HelpLearntoeditCommunityportalRecentchangesUploadfile Tools WhatlinkshereRelatedchangesUploadfileSpecialpagesPermanentlinkPageinformationCitethispageWikidataitem Print/export DownloadasPDFPrintableversion Languages Addlinks