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What is the direct material price variance?

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Question added by Shameer Nazir Madari , Assistant Finance Manager , METAL AND RECYCLING COMPANY K.S.C. (PUBLIC)
Date Posted: 2016/04/26
mohammed shahnawaz ahmed
by mohammed shahnawaz ahmed , Financial analyst , JP FINANCIAL AND INVESTMENT SERVICES

MATERIAL PRICE VARIANCE  is the variance caused by the difference between the actual price paid and the standard price of the direct materials.This can be calculated as follows:

actual quantity*(actual price paid-standard price)

KHALID HAMID SIDDIQUI
by KHALID HAMID SIDDIQUI , Assistant Manager , Toyota - Indus Motor Company

The direct material price variance is the difference between Standard Material Price & Actual Material Price. That is

 

Material Price Variance = Actual Quantity X Standard Price - Actual Quantity X Actual Price

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