Conway Company Purchased Merchandise Inventory with an Invoice Price of $12,000

question 191

Multiple Choice

Conway Company purchased merchandise inventory with an invoice price of $12,000 and credit terms of 2/10, n/30.What is the net cost of the goods if Conway Company pays within the discount period?

• A)$12,000
• B)$11,760
• C)$10,800
• D)$11,040

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Definitions:

Variable Overhead Rate Variance

The difference between the actual variable overhead costs incurred and the expected costs based on standard rates and actual production levels.

Direct Labor-hours

The grand total of working hours by employees who directly contribute to the manufacturing pipeline.

Variable Overhead

Costs that fluctuate with production volume, such as utility expenses or materials costs, which increase or decrease as production levels change.

Variable Overhead Rate Variance

The difference between the actual variable overhead incurred and the expected (or standard) variable overhead based on the predetermined rate.