Business Glossary

difference between what is paid for a given quantity of materials and what should have been paid, multiplied by the actual quantity of materials used: Materials price variance = (actual price - standard price) x actual quantity. In reality, since material price variances are isolated at the time of purchase, it is customary to multiply the difference between the actual price and the standard price by the actual quantity purchasedrather than used. It is more often called materials purchase price variance.