Material price variance (mpv), Cost Accounting

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Material Price Variance (MPV)

This may be described as the difference amoung the actual price and the standard price of the materials consumed.

MPV = Actual quantity used (Standard price - Actual price)

Reasons for Price variance may be

"Emergency buying" in smaller quantities
Alteration in the market price of direct material
Carriage, freight and other charges absorbed in place of being charged to the suppliers
Cash discount not availed
Claims not made on the suppliers for short receipt of materials or substandard materials.

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