What would be the effect on his cost of food formula if a manager accidentally overstated the value of his operation's ending inventory?

Question

Quizplus · Accepted Answer

COverstating the ending inventory would increase the total cost of food available for sale because ending inventory is added to the cost of purchases to determine this total. However, it would also result in the total cost of sales being understated, as the formula for calculating the cost of sales is the cost of food available for sale minus the ending inventory. If the ending inventory is overstated, it would subtract more from the total available, thus reducing the cost of sales more than it should.

What Would Be the Effect on His Cost of Food