Manufacturing Cost Accounting & Finance worked example

Purchase Price Variance at 72% share of volume the variance applies to: a worked example in manufacturing cost accounting & finance

Here is what the math looks like when conditions slip. We hold every other input steady and drop share of volume the variance applies to to 72%, then walk the calculation through step by step. Estimates the purchase price variance booked when actual paid price diverges from standard.

The inputs for this scenario

  • Units purchased in the period: 5,000 units (held at the documented default)
  • Actual minus standard price per unit: 0.85 $ / unit (held at the documented default)
  • Share of volume the variance applies to: 72 % (the input this scenario stresses; the baseline uses 100)
  • Inbound freight and duty adder: 1,200 $ (held at the documented default)

Working through the calculation

  • The calculation starts from the formula this tool documents: PPV = units purchased x price variance per unit x applicable share% + freight and duty.
  • Total purchase price variance cost works out to 4,260 $ at these inputs, and this is the headline figure for the scenario.
  • Purchase price variance cost per unit works out to 0.85 $ / piece at these inputs.
  • Variable purchase price variance cost works out to 3,060 $ at these inputs.
  • Fixed purchase price variance adder works out to 1,200 $ at these inputs.

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 21.83% below the baseline at 4,260 $.
  • The practical read: the gap between this scenario and the baseline is entirely attributable to share of volume the variance applies to, so recovering it is worth quantifying in dollars before considering equipment or staffing changes. It treats the variance per unit as a single average; mix variances, FX swings, and tiered pricing can each move it, so decompose large totals rather than attributing them all to the buyer.

Results at a glance

  • Total purchase price variance cost: 4,260 $ (headline result)
  • Purchase price variance cost per unit: 0.85 $ / piece
  • Variable purchase price variance cost: 3,060 $
  • Fixed purchase price variance adder: 1,200 $

Run it with your numbers

  • To rerun this with your own numbers, open the live Purchase Price Variance calculator, set share of volume the variance applies to to your actual value, and adjust the remaining inputs to match your operation.

Last reviewed 2026-05-12.