Question

The ________ approach adjusts individual job-cost records to account for underallocated or overallocated overhead.

A) adjusted allocation-rate
B) proration
C) write-off to cost of goods sold
D) Both A and B are correct.

Answer 1

The adjusted allocation-rate approach adjusts individual job-cost records to account for underallocated or overallocated overhead.

Step-by-step explanation:

The correct answer is D) Both A and B are correct.

The approach mentioned in the question is called the adjusted allocation-rate approach. This approach adjusts individual job-cost records to account for underallocated or overallocated overhead. The goal is to ensure that the overhead costs are distributed accurately across the different jobs.

The process involves calculating the allocation rate by dividing the total estimated overhead costs by the total estimated quantity of the allocation base. Then, the allocation rate is applied to each job based on its actual usage of the allocation base. This adjustment helps to achieve more accurate costing of individual jobs.