Caribbean Cocoa Ltd. in Trinidad processes cocoa beans into chocolate. The company's manufacturing account shows: Opening work-in-progress $12,000; Closing work-in-progress $8,000. What adjustment is made to calculate the cost of production?

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Question

Caribbean Cocoa Ltd. in Trinidad processes cocoa beans into chocolate. The company's manufacturing account shows: Opening work-in-progress $12,000; Closing work-in-progress $8,000. What adjustment is made to calculate the cost of production?

Accepted Answer

Add $4,000 — Award 1 mark for correct calculation: Opening WIP ($12,000) − Closing WIP ($8,000) = $4,000 net addition. B is incorrect — the net effect is an addition, not a subtraction. C and D use the sum rather than the difference.

Answer

Add $4,000

Answer

Subtract $20,000

Answer

Add $20,000

Answer

Subtract $4,000

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