Which of the Following About Using Proration to Dispose of Underapplied

question 88

Multiple Choice

Which of the following about using proration to dispose of underapplied or overapplied overhead is correct?

• A) Proration is a less accurate method than closing the account to COGS, because it arbitrarily allocates overhead between the COGS account, WIP account, and finished goods account.
• B) Proration is a less accurate method than closing the account to COGS, because the process affects three accounts rather than just one account.
• C) Proration is a more accurate method than closing the account to COGS, because it recognises that over/under estimation of overhead rate affects more than just the COGS account.
• D) Proration is a more accurate method than closing the account to COGS, because the potential distortion is spread out over three accounts.

---

Definitions:

Tailgating

An unauthorized person following an authorized individual to enter a secure area, bypassing physical security measures.

Mantrap

A security mechanism consisting of two or more interlocking doors, which regulates access into a secure area, one person at a time.

Security Cameras

Video recording devices used for monitoring and ensuring the security of a designated area.

ESD Strap

An item that fits around a technician’s wrist and connects to an electronic component so that the technician and the component are at the same voltage potential, thus preventing an electrostatic discharge event.