The proration method of disposing of an overhead variance prorates the variance among three accounts that include Direct Materials Inventory,Work-in-Process Inventory and Finished Goods Inventory.

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The proration method of disposing of an overhead variance prorates the variance among three accounts that include Work-in-Process Inventory, Finished Goods Inventory, and Cost of Goods Sold, not Direct Materials Inventory.

The Proration Method of Disposing of an Overhead Variance Prorates