basis for allocating an amount proportionately to the items involved. An amount may be proportionately distributed to assets, expenses, funds, and so forth. For example, at year end, underapplied overhead may be allocated to work-in-process, finished goods, and cost of sales based on the dollars or units applicable to those accounts. Assume underapplied overhead is $1000, work-in-process is $4000, finished goods is $5000, and cost of sales is $1000. The pro rata charge to work-in-process, for instance, would be $400 ($4000/$10,000 x $1000).The journal entry is:
proportionate allocation. For example, a pro rata property tax rebate might be divided proportionately (prorated) among taxpayers based on their original assessments, so that each gets the same percentage.
Latin for "according to the rate"; a method of proportionate allocation. For example, a pro rata property tax rebate might be divided proportionately (prorated) among taxpayers based on their original assessments, so that each gets the same percentage.
an equal amount, according to the fraction held by each.
Example: A owns 40%, B owns 30%, C owns 20%, and D owns 10%. A $100 pro rata distribution is paid to the owners: A received $40, B received $30, C received $20, D received $10.
| Work-in-process | 400 |
| Finished goods | 500 |
| Cost of sales | 100 |
| Factory overhead | 1000 |
