Work out purchase price variance instantly with clear inputs, formula shown and shareable results.
Purchase price variance values the difference between standard and actual price at the quantity actually bought, and it is the primary measure of purchasing performance. Separating the volume variance keeps demand changes out of the purchasing measure.
Purchase price variance
PPV = (Standard price - Actual price) x Quantity purchased
Volume variance
Volume variance = (Budgeted quantity - Actual quantity) x Standard price
Not if it came from buying lower-grade material or a larger quantity than needed. Read it alongside quality rejection and inventory data.
Purchasing owns the price element; the requisitioning function owns the volume element. Splitting them prevents unproductive argument.