The Proration Method of Disposing of Overhead Variances Assigns the Variance

question 148

Multiple Choice

The proration method of disposing of overhead variances assigns the variance in proportion to the sizes of the ending account balances of ________.

• A) work-in-process inventory, finished goods inventory and direct materials inventory
• B) work-in-process inventory, direct materials inventory and cost of goods sold
• C) work-in-process inventory and direct materials inventory
• D) work-in-process inventory, finished goods inventory and cost of goods sold

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Definitions:

Marginal Cost

The augmentation in total costs associated with the production of an additional unit of a product or service.

Cartel

A group of independent market participants who collude to control prices and production in order to monopolize a market.

Fixed Cost

Costs that do not change with the level of output, such as rent or salaries.

Cartel

A formal agreement among competing firms to control prices or exclude entry of a new competitor in the market, often resulting in higher prices.