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:

Profit-Maximizing Level

The optimal point at which the difference between total revenue and total cost is the greatest, indicating the highest possible profit for a firm.

Short Run

a period in economics during which at least one input is fixed and cannot be changed, limiting a firm's ability to adjust production.

Fixed Costs

Expenses that do not change in proportion to the activities of a business within a certain range of operation, such as rent, salaries, and insurance.

Monopolistically Competitive

A market structure where many firms sell products that are similar but slightly differentiated, allowing them some control over pricing.