what are transferred in costs? when do they occur?

what are transferred in costs?
when do they occur?

Expert Solution

Transferred-in costs ,as is self-explanatory, are costs of the semi-finished units that are tranferred in from the previous process/department , for further processing , until fully completed and transferred as finished units , ready for sale.

They accumulate or aggregate costs all along the way, in different processes.The entire type of accounting is called process costing ---wherein,the processes are sequential and the units gather costs as they pass from one process/department to another where further processing has to be done.

Transferred-in costs occur where mass production of identical items of output are manufactured --for example, packing,covering & labelling of a certain food item where the aforesaid processes are done sequentially and large numbers of packets are produced as the finished product for sale.

They occur because they pass through various processes, before becoming a saleable item & hence pick up costs in the process , such as costs of raw materials, labor & other overheads.

Here, the finished product of one process is the raw material for the next process--- where some other raw material may or may not be added--amongst other costs such as labor & overheads.

ekkarill92 answered 2 years ago

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