If Percentage of Completion in Ending Inventory Is Overestimated

question 27

Multiple Choice

If percentage of completion in ending inventory is overestimated:

• A) the cost per equivalent is understated in this period
• B) the cost per equivalent unit is overstated in this period
• C) the cost per equivalent unit is not affected in this period
• D) understates the cost per equivalent unit in this period only if FIFO method is used

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Definitions:

Supply

the total amount of a specific good or service that is available to consumers.

Inferior Good

A type of good for which demand decreases as the income of the individual increases, inversely related to income.

Normal Good

A good for which demand increases as the income of the consumer increases, reflecting a direct relationship between income and demand.

Income Increases

A rise in the amount of money earned by individuals or households, often measured on an annual basis.