Which option(s)would be consistent with the proration approach for end-of-period adjustments when the underallocated or overallocated variable overhead costs are significant?
A)prorate based on the allocated overhead amount in the ending balance of work-in-process inventory and cost of goods sold
B)immediate write-off to cost of goods sold
C)prorate based on the total ending balance of variable overhead allocated and variable overhead control
D)prorate based on the allocated overhead amount in the ending balance of work-in-process inventory, finished goods inventory, and cost of goods sold
E)prorate based on the total ending balance of cost of goods sold and variable overhead control

Question

Quizplus · Accepted Answer

Prorating based on the allocated overhead amount in the ending balance of work-in-process inventory, finished goods inventory, and cost of goods sold is consistent with the proration approach for significant underallocated or overallocated variable overhead costs. This approach considers the impact of under or overallocation in all relevant inventory accounts and cost of goods sold.

Which Option(s)would Be Consistent with the Proration Approach for End-Of-Period