Material Price Variance Assignment & Homework Help Online
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What is Material Price Variance – Performance Metrics in Accounting
Performance Metrics are those which determine an organization’s behavior and performance. Performance metrics measure an organization’s activities and performance. It should support a range of stakeholder needs such as shareholders, employees to customers. Developing performance metrics usually follows a process of:
- Establishing critical processes/customer requirements
- Identifying specific, quantifiable outputs of work
- Establishing targets against which results can be scored.
One method of preparing performance metrics is by measuring the material price variance.
Material Price Variance is the difference in cost that results from the price is different from the 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 the 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.
Meet our panel of online Material Price Variance assignment experts:
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