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.