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Purchase price variance (PPV) measures the difference between the actual price paid for goods/services and the standard price. Favorable PPV indicates cost savings through effective sourcing and negotiations, while。

Purchasing departments measure PPV when they purchase raw materials. If there is a significant price variance, it needs to be reclassified into the inventory of raw materials, inventory of work-in-progress, cost of products, and。

Read more: Cost Variance: Definition, Formula and Examples Why is PPV important? Most manufacturers agree that raw materials take up most of their running costs,。

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