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In accounting, purchase price variance (PPV) accounts for the potential change in value of materials from when theyre purchased to when theyre recorded. Understanding PPV can help you manage a companys accounting process。

In this article, we answer What is PPV?, outline what causes variances in the purchase price of products and services, discuss why organisations use PPV, explain how to calculate it and review some examples.

Heres the formula to calculate purchase price variance: Purchase price variance = (Actual quantity x Standard price) − Actual quantity x Actual price Related: What Is PPV iwhat is ppvn Accounting? (How to Record It in Your Books)

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