Sam’s work in progress was $6\,500 at the beginning of the year and $11\,200 at the end of the year. While preparing his manufacturing account, Sam failed to include the adjustment for work in progress. What effect would this omission have on the cost of production and the gross profit?
- ACost of production overstated; gross profit overstated
- BCost of production overstated; gross profit understated
- CCost of production understated; gross profit overstated
- DCost of production understated; gross profit understated