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Material Price Variance - Performance Metrics Assignment Help
Material Price Variance is the difference in cost that results from price being different to standard. It is therefore the difference in price multiplied by actual usage.
The formula is:
Price difference* Actual quantity
or
(Standard price-Actual Price)* Actual Quantity
Material Price Variance can be caused by:
i) Fluctuation in market price of the materials.
ii) Excessive shrinkage or losses in transit.
iii) Emergency purchases-placing rush orders for immediate delivery at any price.
Iv) Failure to avail cash discounts on account of delay in payments.
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