When computing the percentage of completion of the current period’s ending work-in-process (EWIP) inventory, an error was made. The error resulted in assigning a higher percentage of completion to each component of the inventory than actually was the case. Consequently, the following were misstated:
1. The computation of total equivalent units
2. The computation of costs per equivalent unit
3. Costs assigned to cost of goods completed for the period
What were the effects of the error for items 1,2 and 3?

Question

When computing the percentage of completion of the current period’s ending work-in-process (EWIP) inventory, an error was made. The error resulted in assigning a higher percentage of completion to each component of the inventory than actually was the case. Consequently, the following were misstated: 
 1. The computation of total equivalent units 
 2. The computation of costs per equivalent unit 
 3. Costs assigned to cost of goods completed for the period 
 What were the effects of the error for items 1,2 and 3?

Answer

1: understate;   2: overstate;   3: overstate

Answer

1: overstate;   2: overstate;   3: understate

Answer

1: understate;   2: understate;   3: overstate

Answer

1: overstate;   2: understate;   3: understate

Answer

None of the other options is correct.

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When computing the percentage of completion of the current period’s ending work-...

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