If percentage of completion in ending inventory is overestimated:
A) the cost per equivalent is understated in this period
B) the cost per equivalent unit is overstated in this period
C) the cost per equivalent unit is not affected in this period
D) understates the cost per equivalent unit in this period only if FIFO method is used

Question

Quizplus · Accepted Answer

If the percentage of completion in ending inventory is overestimated, it means that more costs are allocated to the ending inventory than should be, which results in a lower cost per equivalent unit for the period.

If Percentage of Completion in Ending Inventory Is Overestimated