Purchase Price Variance (PPV) is a measure of the difference between the actual price that is paid and the standard cost of a product. It is important as it brings out how well an employer is managing the cost of purchase. The positive PPV translates to paying less than you should have to maximize profits. Low PPV can presage a problem on supplier side or poor negotiation PV is not just an expense amount that is reported, but it can be used to evaluate the vendor, the performance and the forecasting and help find ways to cost cut. Watching PPV on a regular basis can have a direct effect on the bottom line of your company.

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