Inventory valuation in operation costing requires
A) direct materials and conversion costs being traced to processes.
B) direct material and conversion costs being traced to batches.
C) direct materials traced to batches and conversion costs traced to processes.
D) direct materials traced to processes and conversion costs traced to batches.

Question

Quizplus · Accepted Answer

Operation costing is a hybrid costing system that combines elements of both job costing and process costing. In operation costing, direct materials costs are typically traced to specific batches of products, as these costs can vary significantly between batches. On the other hand, conversion costs (which include labor and overhead) are generally traced to processes, as these costs tend to be more consistent across different batches of products. This approach allows for more accurate and meaningful allocation of costs to products.

Inventory Valuation in Operation Costing Requires