Material price variance (mpv), Cost Accounting

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Material Price Variance (MPV)

This may be described as the difference amoung the actual price and the standard price of the materials consumed.

MPV = Actual quantity used (Standard price - Actual price)

Reasons for Price variance may be

  • "Emergency buying" in smaller quantities
  • Alteration in the market price of direct material
  • Carriage, freight and other charges absorbed in place of being charged to the suppliers
  • Cash discount not availed
  • Claims not made on the suppliers for short receipt of materials or substandard materials.

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