Material Price Variance Calculator

Material Price Variance Calculator is a very helpful tool that gives instant calculation results of material price variances. It is the difference between the actual and standard cost of the material. A variance is favorable if the standard cost of material is higher than the actual cost. And it is unfavorable if the estimated cost is lower than the actual cost.

We subtract the standard cost of material from its actual cost to calculate material price variance. The formula for calculating material price variance is as follows:

Material Price Variance = AQ * (SP – AP)

where AQ = Actual Quantity,
AP = Actual Price,
and, SP = Standard Price

About the Calculator / Features

The calculator provides a quick result of calculation simply by inserting the following details in the calculator:

  • Actual quantity
  • Actual price
  • Standard price

Material Price Variance Calculator

How to Calculate using the Calculator

The user simply has to put the following details into the calculator to obtain the result of material price variance.

  • Actual Quantity

It is the actual quantity of material purchased by the purchasing department. This could be different from the standard quantity due to defects, wastages, or other reasons.

  • Actual Price

It is the actual price, or we can say the cost we have paid for purchasing material. Management always tries to purchase materials at a lower price. However, there could be reasons for the difference between the actual price of the material and its standard price. These reasons could be emergency purchases, purchases of excessive or deficit quantities, price rises, new taxes, etc.

Also Read: Material Variance

  • Standard Price

It is the price of the material that the management estimates at the start of the period. The aim of establishing standards is to compare the actual performance with the pre-determined results. And make it a reference and drive and monitor to see that the actual remains as near as possible to the standard estimates.

A favorable variance is denoted by (F), and an unfavorable or adverse variance is denoted by (A).

Sanjay Borad

Sanjay Bulaki Borad

Sanjay Borad is the founder & CEO of eFinanceManagement. He is passionate about keeping and making things simple and easy. Running this blog since 2009 and trying to explain "Financial Management Concepts in Layman's Terms".

Leave a Comment