If Ending Work-In-Process Inventory Is Understated

question 102

Multiple Choice

If ending Work-in-Process Inventory is understated,

• A) Finished Goods Inventory will be understated
• B) Cost of Goods Sold will be overstated
• C) Manufacturing Overhead will be overapplied
• D) Cost of Goods Sold will be understated

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Definitions:

Diminishing Returns

A principle stating that as more investment is made in a particular resource, the marginal gain in output will eventually decrease.

Fixed Factor

Inputs in production that cannot be easily increased or decreased in the short term, such as buildings and land.

Marginal Cost

The cost associated with producing an additional unit of output, significant in decision-making processes related to production levels.

Market Price

The current price at which an asset or service can be bought or sold, determined by supply and demand in the marketplace.