Operation costing is appropriate when companies produce large batches of similar products and wish to trace the direct labor component of each unit.

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Operation costing is a hybrid costing system used in manufacturing goods that have some common characteristics and some individual characteristics. It combines elements of both job costing and process costing, focusing on batches of similar products but not specifically on tracing the direct labor component of each unit.

Operation Costing Is Appropriate When Companies Produce Large Batches of Similar