How can I measure material cost variance (MKV) or material price variance (MPV)?

Material cost variance (MCV) or material price variance (MPV) is an essential key procurement savings indicator. It identifies the change of material costs or material price with respect to a reference value, e.g. compared to the previous year.

The result should be subsequently compared to the price development on the market as well as the currency effects contained in the change of price so as to avoid erroneous interpretations. The effects measured by the MPV affect the profit and loss statement and therefore demonstrate the added value of the procurement as well.

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Calculating and Analyzing Material Price Variance (MPV)
Material price variance – sometimes also referred to as material cost variance (MCV) – is an essential key indicator for spend managers. ...

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