Able Corporation Uses a Job-Order Costing System

question 187

Multiple Choice

Able Corporation uses a job-order costing system. In reviewing its records at the end of the year, the company has discovered that $2,000 of raw materials has been drawn from the storeroom and used in the production of Job 110, but that no entry has been made in the accounting records for the use of these materials. Job 110 has been completed but it is unsold at year end. This error will cause:

• A) Work in Process to be understated by $2,000 at year end.
• B) Cost of Goods Manufactured to be overstated by $2,000 for the year.
• C) Finished Goods to be understated by $2,000 at the end of the year.
• D) Cost of Goods Sold to be overstated by $2,000 for the year.

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Definitions:

Unknown Variable

A symbol in a mathematical equation or expression that represents a value which is not yet known but is to be found.

Six-figure Accuracy

A level of precision in measurements or calculations that results in an output with six significant figures.

Overline

A line drawn over a symbol or number, often used in mathematics to indicate a repeating decimal or a geometric figure's conjugate.

Denominator

The bottom number in a fraction that shows into how many parts the whole is divided.