Enter the actual unit cost, standard unit cost, and the actual quantity purchased into the calculator to determine the price variance.

## Price Variance Formula

The following formula is used to calculate a price variance of a material.

VPM = (AC – SC) * Q

- Where VPM is the price variance
- AC is the actual unit cost
- SC is the standard cost
- Q is the quantity purchased

## Price Variance Definition

A price variance is defined as the total difference in cost of a unit compared to the standard cost.

## Price Variance Example

How to calculate price variance.

**First, determine the actual cost.**Calculate the actual cost the material was purchased at. For this example we will use $10.

**Next, determine the standard cost.**This would typically be the average cost. We will assume 5$ for the example.

**Next, determine the quantity purchased.**For this example we will say 10 units were purchased.

**Finally, calculate the price variance.**Using the formula we find the price variance is VMP = (10-5)*10 = $50.00. The variance in price was $50.00 over the entire order.

## FAQ

**What is a price variance?**

A price variance is the total difference in price of purchased material from a standard cost. In other words, how much the price varied from the average cost.