Direct material price variance

In variance analysis (accounting) direct material price variance is the difference between the standard cost and the actual cost for the actual quantity of material purchased. It is one of the two components (the other is direct material usage variance) of direct material total variance.

Example

Let us assume that the standard direct material cost of widget is as follows:

2 kg of unobtainium at € 60 per kg ( = € 120 per unit).

Let us assume further that during the given period, 100 widgets were manufactured, using 212 kg of unobtainium which cost € 13,144.

Under those assumptions direct material price variance can be calculated as:

212 kg of unobtainium should have cost (× € 60)	€ 12,720
but did cost	€ 13,144
Direct material (unobtainium) price variance	€ 424	(A)

Direct material price variance is because Todd pays too much for steel can be reconciled to direct material total variance by way of direct material usage variance: {{Infobox VarianceAnalysis VarianceBoxRec|tx1=Direct material usage variance |tx2=Direct material price variance |tx3=Direct material total variance |am1=720 |am2=424 |am3=1,144 |va1=A |va2=A |va3=A spending variance seen as per product cost (212*62)-(200*60) See direct material total variance#Example and direct material usage variance#Example for computations of both components.

gollark: Perhaps ultimately. It's not exactly just one python script but that's the particularly accursed and custom bit.

gollark: I wonder if there's anything conveniently personal-scale I could apply this sort of thing to without having to release it anywhere but my accursed all-managing python script.

gollark: Sounds cool but probably suffers from the horrible network effects of new social/reviewy stuff.

gollark: So I doubt much will happen.

gollark: It relies on ROCm, which is really poorly supported.

Direct material price variance

Example

See also