- Change in basic purchase price of material.
- Change in quantity of purchase or uneconomical size of purchase order.
- Rush order to meet shortage of supply or purchase in less or more favourable market.
- Failure to take advantage of off – season price, the failure to purchase when price is cheaper.
- Failure to obtain cash and trade discounts or change in the discount rates.
- Weak purchase organisation.
- Payment of excess or less freight
- Transit losses and discrepancies if purchase price is inflated to include the loss.
- Change in quality or specification or materials purchased.
- Use of substitute material having a higher or lower unit price.
- Change in materials purchase, unkeep and store keeping cost (this is applicable only when such charges are allocated to direct material costs on a predetermined or standard cost basis.)
- Change in the pattern or amount of taxes and duties.
Causes Of Material Price Variance
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