A Company That Uses a Perpetual Inventory System Made the Following

question 96

Essay

A company that uses a perpetual inventory system made the following cash purchases and sales. There was no beginning inventory.
$\begin{array}{|l|l|}\hline \text { January 1: } & \text { Purchased } 100 \text { units at } \$ 10 \text { per unit } \\\hline \text { February 5: } & \text { Purchased } 60 \text { units at } \$ 12 \text { per unit } \\\hline \text { March 16: } & \text { Sold } 40 \text { units for } \$ 16 \text { per unit } \\\hline\end{array}$ Prepare the general journal entry to record the March 16 sale, assuming the weighted-average method is used.

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Definitions:

Materials Purchased

The total cost of raw materials bought for use in the production process.

Materials Quantity Variance

The difference between the actual quantity of materials used in production and the quantity expected, multiplied by the standard cost per unit.

Standard Quantity

The expected amount of materials or input needed to produce a unit of output.

Actual Materials

The actual amount of materials used in the production process, measured in physical units or cost.