What is Purchase Price Variance (PPV) and How to Calculate it?
SCMDOJO
MARCH 24, 2025
PPV Calculation: PPV= (Standard Price – Actual Price) * 5000 PPV = ($120.00 – $142.00) *5,000 PPV = -$110,000 (Unfavorable) Favorable PPV: Favorable PPV occurs when the standard price or estimated cost is higher than the actual price or purchase cost, resulting in cost savings. What Causes Favorable Purchase Price Variance (PPV)?
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