A Company That Uses a Perpetual Inventory System Purchased $1,800

question 259

Multiple Choice

A company that uses a perpetual inventory system purchased $1,800 of merchandise on July 5 with terms 2/10, n/30. On July 7, it returned $200 worth of merchandise. On July 28, it paid the full amount due. The amount of the cash paid on July 28 equals:

• A)$200.
• B)$1,564.
• C)$1,568.
• D)$1,600.
• E)$1,800.

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Definitions:

Immaterial Variances

Small or insignificant differences between budgeted and actual figures that are not considered important enough to analyze in detail.

Fixed Overhead Variance

The difference between actual fixed overhead costs and the expected (or budgeted) fixed overhead costs.

Volume Variance

A financial term that represents the difference between the expected (budgeted) volume of production or sales and the actual volume achieved.

Spending Variance

The difference between the budgeted or planned amount of expense and the actual amount spent.