PPV CalculatorPurchase price variance formula
PPV = (actual price − standard price) × actual quantity
Purchase price variance measures how much more or less you paid for what you bought than the standard price you planned. A positive PPV is unfavourable (you paid more); a negative PPV is favourable (you paid less).
PPV % = (actual price − standard price) ÷ standard price.
Example 1: unfavourable variance
Standard price 10.00, actual price 10.60, 1,000 units bought.
(10.60 − 10.00) × 1000 = 600.00 (6% over standard, unfavourable)
Example 2: favourable variance
Standard price 4.50, actual price 4.20, 2,500 units bought.
(4.20 − 4.50) × 2500 = −750.00 (-6.7%, favourable)
Example 3: when the supplier invoices in another currency
Standard price 9.80 in your currency. The supplier charged 9.10 in theirs for 1,200 units. You planned at a rate of 1.08; you paid at 1.12.
| Price effect: (9.1 × 1.08 − 9.8) × 1200 | 33.60 |
| Exchange-rate effect: 9.1 × 1200 × (1.12 − 1.08) | 436.80 |
| Total PPV | 470.40 |
The supplier's own price was almost on standard. 93% of this variance is the exchange rate, which a buyer can't negotiate away. Reporting the total alone would send procurement after the wrong cause.
Where PPV goes wrong
- Stale standards. If standards aren't updated, part of the variance is the standard, not the purchase.
- Mixed currencies. Without a rate split, currency moves look like supplier price changes.
- Missing data. Lines with no standard or no rate get quietly treated as zero or 1. This calculator lists them as unresolved instead.
- Purchase vs usage. PPV uses the quantity bought. Using more material than planned is a separate usage variance.
Questions
What is the purchase price variance formula?
PPV = (actual price per unit − standard price per unit) × actual quantity purchased. A positive result means you paid more than standard (unfavourable); a negative result means you paid less (favourable).
How do you calculate PPV as a percentage?
PPV % = (actual price − standard price) ÷ standard price. Paying 10.60 against a standard of 10.00 is +6%.
Is purchase price variance the same as material price variance?
They use the same formula. Material price variance is the cost-accounting name; purchase price variance is the name procurement and finance teams usually use when it is measured at purchase.
Should PPV use the quantity purchased or the quantity used?
The quantity purchased. PPV isolates the price paid; the difference between the quantity used and the standard quantity is a separate usage (quantity) variance.
How do exchange rates affect PPV?
When the supplier invoices in another currency, PPV can be split exactly into an exchange-rate effect, actual price × quantity × (actual rate − standard rate), and a price effect, the rest. The two add up to the total.
Know the number. Now fix the cause.
If the variance comes from what you agreed to pay, the fix is in buying and contracts. If it comes from explaining the number at month end, the fix is in finance. Five questions tell you which.