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February 2, 2016

2/02/2016 09:58:00 PM
Purchase price variance 
The purchase price variance is the difference between the standard costs for the material and landed cost elements and the corresponding actual costs from the matched, posted, and extracted vouchers.
Based on the timing of the voucher processing and the Landed Cost Extract process, the PPV could be computed and posted in one or two parts.
If the voucher is not available when you run the Transaction Costing process, then the system calculates the difference between the standard
cost and the PO price. When the voucher becomes available, then the Transaction Costing process computes the difference between the voucher price (in terms of the exchange rate at PO time) and the standard cost less variances previously recorded.

This example illustrates the accounting entries for purchase price variance  for a standard cost item.
The inventory business unit's currency in this example is U.S. dollars (USD).

At PO         100.00 USD

The standard cost of the item is 90.00 USD.

10 units are received.

At receipt time, an entry is made to debit the inventory account at the standard cost of the item and credit the accrued liabilities account at the PO price. The difference between the PO price and the standard cost is considered purchase price variance.
Account Entries
Account                 Debit     Credit  
Inventory               900.00
Accrued Liabilities             1,000.00
Purchase Price Variance 100.00

Where to define in Apps: Define Organization Parameters

For Purchase Accounting Information Read following article

Oracle Applications :Purchasing Receiving Inventory Account