Which method for dealing with under/over allocated overhead provides the most accurate inventory and cost of goods sold account balances?

Question

Quizplus · Accepted Answer

The proration approach and the adjusted allocation-rate approach both provide more accurate inventory and cost of goods sold account balances than the immediate write-off to cost of goods sold approach. The proration approach allocates the under/over allocated overhead to the units produced during the period, while the adjusted allocation-rate approach adjusts the overhead allocation rate for the period to reflect the actual overhead costs incurred. Both of these approaches result in a more accurate allocation of overhead costs to the units produced, which in turn leads to more accurate inventory and cost of goods sold account balances.

Which Method for Dealing with Under/over Allocated Overhead Provides the Most