AASB 102 requires that variances relating to over and under applied overhead should be pro-rated between cost of sales and inventory.

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AASB 102 does not specifically address the treatment of variances relating to over and under applied overhead; it focuses on the accounting for inventories and requires that inventories be measured at the lower of cost and net realisable value. The treatment of overhead variances is more directly related to costing methodologies rather than the specific requirements of AASB 102.

AASB 102 Requires That Variances Relating to Over and Under