The proration method assigns underapplied overhead and overapplied overhead amounts based on the beginning-of-year account balances of WIP, Finished Goods, and Cost of Goods Sold.

Question

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The proration method assigns underapplied or overapplied overhead based on the ending balances of Work in Process (WIP), Finished Goods, and Cost of Goods Sold accounts, not the beginning-of-year balances.

The Proration Method Assigns Underapplied Overhead and Overapplied Overhead Amounts