QUESTION 1

Which of the following statements about a process costing system is incorrect?

• In a process costing system, each processing department has a work in process account.
• In a process costing system, equivalent units are separately computed for materials and for conversion costs.
• In a process costing system, overhead can be underallocated or overallocated just as in the job-order costing.
• In a process costing system, material costs are traced to units of products.