An Error Was Made by Marrow Company in Computing the Percentage-Of-Completion

question 112

Multiple Choice

An error was made by Marrow Company in computing the percentage-of-completion of the current year's ending Work-in-Process Inventory. The error resulted in the assignment of a lower percentage of completion to each component of the inventory than actually was the case. There was no beginning Work-in-Process Inventory. What is the effect of this error on (1) cost assigned to cost of goods completed for the period and (2) the computation of costs per equivalent unit?

• A) Understated; Understated
• B) Understated; Overstated
• C) Overstated; Understated
• D) Overstated; Overstated

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Definitions:

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A fleeting downturn in the economy, where there's a shrinkage in trade and industrial operations, generally noticed by two successive quarters of GDP decline.

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A conflict between North Korea, supported by China and the Soviet Union, and South Korea, supported by the United Nations, primarily the United States, which lasted from 1950 to 1953.

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The uptick in the overall pricing scheme for goods and services, leading to a diminution of acquisition power.