If a company chooses to spread overapplied or underapplied overhead to all the accounts that contain applied overhead,the proration should be based on

Question

Quizplus · Accepted Answer

The proration should be based on the ending balances in each account because this takes into account the actual amount of overhead applied to each account during the period. If the accounts are prorated equally or based on the least overhead applied, it may not accurately reflect the actual amount of overhead that was over or under applied.

If a Company Chooses to Spread Overapplied or Underapplied Overhead