Material Price Variance Formula
Material Price variance is
difference between standard price and actual price of actual quantity consumed
during the production. Material price variance may be favorable or adverse.
Material Price Variance = Actual
quantity x (Standard price- Actual Price).
Example
Actual
Quantity Consumed = 5000 kg
Standard
Price per unit = $ 5
Price
of Material = 40,000
Calculate
Material Price Variance
Solution
Actual
Price = 40000/5 = 8
Material Price Variance = Actual
quantity x (Standard price- Actual Price).
Material
Price Variance = 5000 (5 – 8)
=5000
(-3)
=-15,000 (Adverse Material Price
Variance)
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