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e-lub [12.9K]
3 years ago
11

A company purchases inventory on account for $45,000 with terms 2/10, n/30. Under the net method of accounting for purchases, th

e purchase would be recorded at:_______
a. $36,000.
b. $40,500.
c. $45,000.
d. $44,100.
Business
1 answer:
taurus [48]3 years ago
8 0

Answer:d. $44,100.

Explanation:

The net method is a way a company or firm records its customer's invoice. Under the net method of Accounting for purchases,  The record of purchases are recorded considering  the cash discount.

Therefore

Purchase price = $45000

Cash Discount  at terms  2/10 n/30

$45000  x  2% =  $45,000 x 0.02 =$900

Net purchase price = $45000 - $900 = $44,100.

The journal to record the inventory purchased on account using the  net method  will be

Accounts  Titles                             Debit             Credit

Inventory                                 $44,100.  

Accounts payable                                              $44,100.

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Problem 9-18 Comprehensive Variance Analysis [LO9-4, LO9-5, LO9-6]
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1 a. Materials price and quantity variances.

Material price variance = (Actual price - Standard price) * Actual Quantity purchased

= ($2.45 - $2) * 15,800

= $0.45 * 15,800

= $7110 (Unfavorable)

Materials Quantity variance = (Actual Quantity used - Standard Quantity allowed) * Standard price  

(10600 - 3000 * 3.6) * $2

= (10,600 -  10,800) * $2

= 200 * $2

= 400 (Favorable)

b. Labor rate and efficiency variances.

Labor rate variance = (Actual rate - standard rate) * Actual hours

= (6.30 - 6.6) * 2,100

= 0.3 * 2,100

= 630 (Favorable)

Labor Efficiency variance  = (Actual hours - standard hours allowed) *  Standard rate  

= (2100 - 3000 * 0.5) * 6.6

= (2,100 - 1,500) * 6.6

= 600 * 6.6

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c. Variable overhead rate and efficiency variances

Variable overhead rate variance  = (Actual rate - Standard rate * Actual machine hours)

= 3000 - (2.10 * 1200)

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= 630 (Unfavorable)

2.    Variances                                            Amount

Material price variance                             7,110 U

Material quantity variance                         400 F

Labor rate variance                                    630 F

Labor efficiency variance                           3,960 U

Variable overhead rate variance               480 U

Variable overhead efficiency variance      <u>630 U</u>

Net variance                                                <u>11,150 U</u>

<u></u>

The net variance of all the variance of the month is 11,150 (Unfavorable)

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3 years ago
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