Price Variance Calculator

Formula

To calculate the Price Variance (VPM) from the actual unit cost (AC), standard cost (SC), and quantity purchased (Q):

\[ VPM = (AC - SC) \times Q \]

Where:

$VPM$ is the Price Variance
$AC$ is the Actual Unit Cost
$SC$ is the Standard Cost
$Q$ is the Quantity Purchased

What is Price Variance?

The price variance is a measure that determines the difference between the actual cost of a product or service and its expected cost. It is significant as it helps identify deviations from the anticipated budget, enabling businesses to assess and control their expenses effectively.

Example Calculation 1

Let's assume the following values:

Actual Unit Cost ($AC$) = $12
Standard Cost ($SC$) = $10
Quantity Purchased ($Q$) = 100 units

Using the formula:

\[ VPM = (12 - 10) \times 100 = 200 \]

The Price Variance is $200.

Example Calculation 2

Let's assume the following values:

Actual Unit Cost ($AC$) = $15
Standard Cost ($SC$) = $13
Quantity Purchased ($Q$) = 50 units

Using the formula:

\[ VPM = (15 - 13) \times 50 = 100 \]

The Price Variance is $100.