Under the proration approach, the sum of the amounts shown in the subsidiary ledgers will not match the amounts shown in the general ledger because no adjustments from budgeted to actual manufacturing overhead rates are made in the individual job-cost records.

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Quizplus · Accepted Answer

This statement is true. The proration approach uses budgeted manufacturing overhead rates to allocate overhead costs to individual jobs in the job-cost records. However, at the end of the period, when actual manufacturing overhead costs are incurred and the actual overhead rate is calculated, no adjustments are made to the job-cost records. Therefore, the sum of the amounts shown in the subsidiary ledgers will not match the amounts shown in the general ledger, which includes the adjusted actual overhead costs.

Under the Proration Approach, the Sum of the Amounts Shown