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.