Able Corporation Uses a Job-Order Costing System

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.