The spreading of underallocated or overallocated overhead among ending work-in-process, finished goods, and cost of goods sold is called ________.
A) the adjusted allocation rate approach
B) the proration approach
C) the write-off of cost of goods sold approach
D) the weighted-average cost approach

Question

Quizplus · Accepted Answer

The spreading of underallocated or overallocated overhead among ending work-in-process, finished goods, and cost of goods sold is called the proration approach. The adjusted allocation rate approach involves recalculating the overhead allocation rate based on actual usage, the write-off of cost of goods sold approach is a way to account for losses, and the weighted-average cost approach is a method of inventory costing.

The Spreading of Underallocated or Overallocated Overhead Among Ending Work-In-Process