The Price Variance Calculator is a financial tool used to determine the difference between the actual cost and the standard cost per unit of a product or service multiplied by the actual quantity produced or purchased. It helps in understanding the variance between planned and actual expenditures.

### Formula of Price Variance Calculator

The formula for calculating Price Variance is straightforward:

**Price Variance = (Actual Price – Standard Price) * Actual Quantity**

Where:

**Price Variance**: The difference between the actual and standard costs.**Actual Price**: The real cost per unit of the product or service.**Standard Price**: The budgeted or standard cost per unit.**Actual Quantity**: The real quantity of units produced or purchased.

### Table of General Terms

Term | Description |
---|---|

Budgeted Cost | Planned or expected cost for a particular activity or service. |

Actual Cost | The real cost incurred for a specific activity or service. |

Variance Analysis | Process of analyzing differences between planned and actual outcomes. |

Quantity Variance | Variance resulting from differences in actual and planned quantities. |

Standard Cost | Predetermined cost usually based on estimates or historical data. |

Cost Variance | The difference between the actual cost and the standard cost. |

### Example of Price Variance Calculator

Suppose a company planned a standard cost of $10 per unit for producing 100 units. However, the actual cost turned out to be $12 per unit, and the company produced 120 units. Using the Price Variance formula:

**Price Variance = ($12 – $10) * 120 = $240**

This indicates that the company overspent by $240 more than the planned cost due to higher per-unit costs and increased production.

### Most Common FAQs

**What is Price Variance used for?**Price Variance is used to evaluate differences between actual and expected costs in production or purchasing.

**How does Price Variance impact businesses?**It helps businesses assess cost overruns or savings compared to planned budgets, aiding in financial decision-making.

**Can Price Variance be negative?**Yes, a negative Price Variance implies lower actual costs than the standard, signaling cost savings.