Metrics & KPIsPurchase price variance
Definition
Difference between actual purchase unit price and standard unit price, multiplied by actual quantity of input used. It reflects a change between the expected price and actual price of input.
Formula
(Actual Price - Standard Price) x Actual Quantity
Use Case / Interpretation
Positive result indicates an increase in costs (i.e., an unfavorable variance), while a negative result means a reduction in costs (i.e., a favorable variance).
Tags
purchase, variance, price