Materials Price Variance

This video shows how to calculate the Materials Price Variance. The Materials Price Variance is the difference between: (1) actual quantity purchased * actual purchase price and (2) actual quantity purchased * standard purchase price This is sometimes abbreviated as: (AQ * AP) - (AQ * SP) If the company spent more than it should have (according to the standard, which is set by management), then the materials price variance is unfavorable. If the variance is large enough you should speak with the purchasing manager to identify the source of the problem (perhaps prices in the industry increased, perhaps the purchasing manager isn't getting good deals, etc.). Edspira is your source for business and financial education. To view the entire video library for free, visit http://www.Edspira.com To like Edspira on Facebook, visit https://www.facebook.com/Edspira To sign up for the newsletter, visit http://Edspira.com/register-for-newsletter Edspira is the creation of Michael McLaughlin, who went from teenage homelessness to a PhD. The goal of Michael's life is to increase access to education so all people can achieve their dreams. To learn more about Michael's story, visit http://www.MichaelMcLaughlin.com To follow Michael on Twitter, visit https://twitter.com/Prof_McLaughlin To follow Michael on Facebook, visit https://www.facebook.com/Prof.Michael.McLaughlin