Asked by Gabrielle Monique on Jun 26, 2024
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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.
Job-Order Costing
An accounting method used to track the costs associated with producing a specific batch of products or providing a particular service, allocating costs to each job individually.
Raw Materials
Basic materials or substances used in the initial stages of manufacturing or production.
Work in Process
Inventory that includes goods partially completed; not yet ready for sale but are in various stages of the production process.
- Evaluate and implement overhead expenses through the use of pre-established rates within a job-order costing framework.
- Recognize and apply appropriate T-account summaries for monitoring production expenses and inventory transitions.
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Learning Objectives
- Evaluate and implement overhead expenses through the use of pre-established rates within a job-order costing framework.
- Recognize and apply appropriate T-account summaries for monitoring production expenses and inventory transitions.
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