All of the following statements about an operation-costing system are true except:
A) direct material and conversion costs are traced to each batch of product produced.
B) direct-material cost is traced to each batch produced.
C) conversion costs are applied to products on a departmental basis using a predetermined application rate.
D) batches of product pass sequentially through the same processes.
E) conversion activities are similar across product lines but direct materials differ significantly.

Question

Quizplus · Accepted Answer

In an operation-costing system, direct material costs are indeed traced to each batch produced, but conversion costs are applied on a departmental basis, not necessarily traced to each batch. This makes option A incorrect as it suggests both direct material and conversion costs are traced to each batch, which is not typically the case in operation costing.

All of the Following Statements About an Operation-Costing System Are