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How do you calculate material price variances and what are the possible reasons for such variances?
Wiki User
∙ 15y ago
Following are the causes of material price variance: 1.There could have been recent changes in purchase price of materials. 2.Price variance can be due to substituting raw materials different from the original material specification. 3.Price variance can be attributed to the non availability of cash discounts which was originally anticipated at the time of setting the price standards. 4.Changes in transportation costs and storekeeping costs can also be contributing factors to material price variance.
Wiki User
∙ 16y ago
Wiki User
∙ 15y agoMaterial Variance Cost Calculations: Standard (Budget) Price - Actual Price = Price Variance [Std (Budget) Price - Actual Price] / Std Price = Percent (%) Variance
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