An operation-costing system is a hybrid costing system applied to batches of similar,but not identical,products.

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An operation-costing system combines features of both job-order costing and process costing. It is used when batches of similar products undergo a sequence of operations, but each batch may not be identical. The cost of each operation is accumulated separately and then allocated to the batches based on the number of operations performed or some other activity measure. This system provides a compromise between the detailed tracking of costs in a job-order system and the efficiency of a process costing system.

An Operation-Costing System Is a Hybrid Costing System Applied to Batches