Prorated allocation of production-volume variance has the effect of approximating the allocation of fixed costs based on actual costs and actual output.

Question

Quizplus · Accepted Answer

Prorated allocation of production-volume variance takes into account the actual output to allocate production-related costs. This approximation helps to allocate fixed costs based on actual costs and actual output. Therefore, the given statement is true.

Prorated Allocation of Production-Volume Variance Has the Effect of Approximating