Which Option(s)would Be Consistent with the Proration Approach for End-Of-Period

question 75

Multiple Choice

Which option(s) would be consistent with the proration approach for end-of-period adjustments when the underallocated or overallocated variable overhead costs are significant?

• A)prorate based on the allocated overhead amount in the ending balance of work-in-process inventory and cost of goods sold
• B)immediate write-off to cost of goods sold
• C)prorate based on the total ending balance of variable overhead allocated and variable overhead control
• D)prorate based on the allocated overhead amount in the ending balance of work-in-process inventory, finished goods inventory, and cost of goods sold
• E)prorate based on the total ending balance of cost of goods sold and variable overhead control

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Definitions:

Competitive Firms

Companies that operate in markets where no single firm has the power to influence the price of goods and services significantly.

Monopolistic Firms

Companies that have significant control over the market for a particular good or service, allowing them to influence price and production levels.

Economic Inefficiency

A situation where resources are not used in the most productive way, often leading to waste or a loss of potential output.

Minimum Average Total Cost

The lowest point on the average total cost curve, where a firm is most efficiently combining resources to produce goods or services.