The proration method of disposing of overhead variances prorates the variance based on the beginning of the reporting period account balances in Cost of Goods Sold,Work-in-Process Inventory and Finished Goods Inventory.

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The proration method of disposing of overhead variances typically allocates the variance based on the ending balances of Cost of Goods Sold, Work-in-Process Inventory, and Finished Goods Inventory, not the beginning balances.

The Proration Method of Disposing of Overhead Variances Prorates the Variance