Manufacturing Cost Accounting & Finance worked example

Purchase Price Variance at 110% share of volume the variance applies to: a worked example in manufacturing cost accounting & finance

Push share of volume the variance applies to up to 110% and the picture changes. This example computes every intermediate figure at that operating point. Use it to quantify a receipt's PPV and isolate how much of a margin miss is procurement-driven.

The inputs for this scenario

  • Units purchased in the period: 5,000 units (unchanged)
  • Actual minus standard price per unit: 0.85 $ / unit (unchanged)
  • Share of volume the variance applies to: 110 % (raised for this scenario; the documented default is 100)
  • Inbound freight and duty adder: 1,200 $ (unchanged)

Working through the calculation

  • Applying the documented formula (PPV = units purchased x price variance per unit x applicable share% + freight and duty) to the inputs above produces each figure below.
  • At this operating point the engine returns 5,875 $ for total purchase price variance cost, the number this scenario is built around.
  • At this operating point the engine returns 1.18 $ / piece for purchase price variance cost per unit.
  • At this operating point the engine returns 4,675 $ for variable purchase price variance cost.
  • At this operating point the engine returns 1,200 $ for fixed purchase price variance adder.

How this compares with the baseline

  • Against the tool's baseline example, where share of volume the variance applies to sits at 100% and the headline result is 5,450 $, this scenario comes in 7.8% above the baseline at 5,875 $.
  • It computes the total purchase price variance dollars for a buy and the variance per unit, including a fixed freight and duty adder for landed cost. The value of this scenario is the size of the gap it exposes: that gap, priced out over a year, is the budget you can justify spending to close it.

Results at a glance

  • Total purchase price variance cost: 5,875 $ (headline result)
  • Purchase price variance cost per unit: 1.18 $ / piece
  • Variable purchase price variance cost: 4,675 $
  • Fixed purchase price variance adder: 1,200 $

Run it with your numbers

  • Every input above is editable in the live Purchase Price Variance calculator, which recalculates instantly and can be shared with the inputs intact.

Last reviewed 2026-05-12.