Management wants to prepare a profitability analysis of the company's customers and therefore the most accurate choice of disposing of underallocated or overallocated manufacturing overhead at year-end is the proration based on final balances of work-in-process, finished goods, and cost of goods sold.

Question

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The adjusted allocation-rate method would be more accurate as it would adjust individual jobs based on the actual overhead cost rate, calculated when actual overhead costs are known at the end of the period.

Management Wants to Prepare a Profitability Analysis of the Company's