Interview Questions

 1.What is Purchase Price Variance ?

2. Explain about Invoice Price Variance ?

 

1. Purchase Price Variance

Purchasing and Inventory provide you with visibility and control of your purchase price variances. When you use standard costing, Purchasing and Inventory automatically calculate and record purchase price variances as you receive your inventory items into inventory. If desired, Purchasing and Inventory automatically calculate and record purchase price variances for your outside processing receipts into work in process. You can use the Purchase Price Variance Report to review the accuracy of the standard costs for your purchased items and services.

PPV= standard cost - actual cost ie:difference between standard cost and po price.

2. Invoice Price Variance (IPV) and Exchange Rate Variance

Purchasing and Inventory provide you with visibility and control of your invoice price and exchange rate variances. Payables automatically calculates and records invoice price and exchange rate variances in your general ledger when you have matched, approved and posted your invoices. You can use the Invoice Price Variance Report to review the accuracy of your purchase order prices.

IPV= difference between invoice price and po price.

These IPV, PPV only for inventory and wip transactions.