Purchase price variance
PPV / PPV · Price variance
Purchase price variance is the difference between the actual price paid for a purchased item and a standard or expected price, multiplied by the quantity purchased.
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Simply put
What it means in ordinary work
It explains how much of a cost change came from price rather than volume. The result depends heavily on the standard used.
Why it matters
PPV is a common measure in manufacturing and cost accounting. It can highlight price performance, but it can also encourage decisions that harm total cost.
A hypothetical in practice
A hypothetical buyer pays 12 percent more for a component but purchases 20 percent less due to demand changes. Finance separates the price effect from the volume effect before evaluating procurement performance.
Common pitfalls
A standard price can be outdated or set without market evidence. Review it.
Buying cheaper material can increase scrap or downtime, creating an offsetting cost elsewhere.
Scope and limits
Example formula: (actual unit price minus standard unit price) multiplied by quantity purchased. Clearly state whether quantity is actual or standard and how currency and specification changes are handled.
Regional lens
How this lands where you work
The global explanation is canonical. Regional notes are additive, separately sourced and shown with their own review state. They never replace the global meaning.
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As-of date for date-sensitive regional content: 5 November 2026. Read the review policy.