When ending inventories are high, inaccurate measurement of percentage of completion:
A) does not affect cost reports
B) distorts cost reports in this period.
C) distorts cost reports in this period and next period.
D) causes higher spoilage costs this period and next period

Question

Quizplus · Accepted Answer

Inaccurate measurement of the percentage of completion when ending inventories are high can distort cost reports in both the current period and the next period. This is because the misstated percentage of completion affects the valuation of ending inventory, which then carries over into the next period as beginning inventory, impacting the cost of goods sold and potentially other financial metrics in both periods.

When Ending Inventories Are High, Inaccurate Measurement of Percentage of Completion