Purchase Price Variance Analysis Worksheet
Purchase price variance shows how far what you paid drifted from what you planned. This worksheet lists receipts with standard and actual price, so you can see the total and which parts cause it. Edit rows and export to Excel for the buyer review.
| Part number | Vendor | Qty received | Standard cost | PO price | Standard value | PPV (+ unfavorable) | PPV percent | |
|---|---|---|---|---|---|---|---|---|
$5,100 | $432 | 8.5% | ||||||
$550 | -$50 | -9.1% | ||||||
$1,280 | $140 | 10.9% | ||||||
$4,688 | $0 | 0% | ||||||
$1,860 | -$156 | -8.4% |
Positive PPV means you paid more than standard (unfavorable). Negative means you paid less (favorable). Keep standards and PO prices in the same unit of measure and currency.
Automate PPV reporting from your ERP
Optional: see how weekly PPV by part and vendor can be generated read-only.
Optional. The tool and every export work without this. No spam.
How to use the worksheet
Paste or type one row per received part: quantity, standard cost and the price on the purchase order. The sheet computes standard value, PPV in currency and PPV as a percent of standard. Sort or review the largest variances first. Compare vendors for the same part by adding separate rows. Use the summary to see whether net variance is a rounding issue or a pattern worth acting on.
- Match units of measure before comparing prices
- Convert foreign currency at the rate your system uses
- Separate freight and duty from item price
The formula
PPV equals actual price minus standard price, multiplied by quantity received. Positive means unfavorable under the sign convention used here. Many ERPs post this variance to a price variance account at receipt or invoice match, so the same number should appear in your ledger. In the example, aluminum plate cost 3.60 more per sheet across 120 sheets, adding 432 of unfavorable variance, partly offset by favorable stainless bar.
Reading the result
A small net figure can hide large offsetting variances, so look at the gross movement too. Persistent unfavorable PPV on a commodity suggests the standard is stale and should be revised, not that buyers are failing. Persistent favorable PPV may mean standards were set too high, which overstates inventory and product cost. Review standards at least annually and after known price events, and link variance to supplier and contract terms.
Common mistakes
Comparing prices in different units, ignoring quantity breaks, treating all variance as buyer performance, and not separating timing from real price change. Also watch for receipts valued at standard but invoiced later at a different price, which creates invoice price variance in some systems. In SAP, for example, standard price materials post differences to price difference accounts, whereas moving average materials follow a different path.
Frequently Asked Questions
Is positive PPV good or bad?
Under the convention in this worksheet, positive means you paid more than standard, so it is unfavorable. Some systems flip the sign. Check your ledger convention before comparing numbers across reports.
How often should standard costs be updated?
At least annually, and sooner after large commodity or supplier changes. Constantly large variances on a part usually mean the standard no longer reflects market reality.
Does PPV include freight and duty?
Not by default. Item price variance is separate from landed cost variance. Track freight and duty in their own cost elements or allocations so buyer price performance is not mixed with logistics.
Can PPV be used to judge buyers?
Only with care. Variance depends on how standards were set, market moves and engineering changes. Use it as a signal for review, together with savings against quoted prices and supplier performance.
If you want PPV by part and vendor pulled directly from your ERP each week, we can help build a read-only report with the underlying query shown.
Related Tools
SAP Purchase Price Variance and Moving Average Price Calculator
See the price difference posted at goods receipt for a standard price material and the new moving average price for a MAP material.
Costing & FinanceStandard Cost Change Request Template
Document why a standard cost is changing, the inventory revaluation impact and who approved it before the roll-up runs.
Costing & FinanceSubcontract and Outside Processing Cost Worksheet
Cost each outside operation with price per piece, vendor minimum charge and freight, and see the true cost per part.
Costing & FinanceOverhead Cost Pool Allocation Worksheet
Set a predetermined overhead rate for each cost pool and compare absorbed overhead with actual spend.
More Costing & Finance tools
See all- Manufacturing KPI Formula and Definitions Reference
- Manufacturing Cost Variance Types Reference
- Price, Volume and Cost Margin Variance Calculator
- Month End Reporting Readiness Checklist for Manufacturers
- OEE Improvement Value Calculator
- Improve OEE vs Buy a New Machine Calculator
- Six Sigma Project Savings Tracker Worksheet
- Should Cost Model Worksheet for Machined Parts
- Quote Assumptions and Exclusions Template