If the price paid per unit differs from the standard price per unit for direct materials, the variance is a Price variance.
What does "price variance" mean?
The price variance is calculated by multiplying the number of real units actually purchased by the actual unit cost of the item less its standard cost.
The estimated or planned cost of an item based on engineering or manufacturing data is known as its standard cost.
The difference between an item's predicted cost and its actual cost at the moment of purchase is referred to as price variance in cost accounting.
This formula is used to determine price variance: Vmp is calculated as (Actual unit cost - Standard unit cost) x Actual Quantity Bought.
To learn more about the Price variance., refer to the following link:
