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Which of the following statements is incorrect? Multiple Choice External financial reporting requirements call for allocating manufacturing overhead to work-in-process inventory. . Variable overhead is allocated on the basis of production expected to be achieved over a number of periods after taking planned maintenance into consideration (normal capacity). Over/underabsorbed overhead can be reported on the income statement or allocated among inventory accounts on the balance sheet. Proration of over/underabsorbed overhead is chosen when it will alter an investment decision. O Firms involved in cost-plus projects will choose to recost each job because the firm's revenue is tied to its costs