DEFINITION of 'Transferred-In Costs'

The money spent on switching the processing of a product or a service between departments of a company. Transferred-in costs combine manufacturing costs by the various departments and production processes. This method is more often used in cost accounting for companies that produce continuous similar units through a series of operations such as petroleum, chemical, textile and food processing companies.

BREAKING DOWN 'Transferred-In Costs'

Between two departments, lets say A and B, these costs would be attributed to units from Department A. Also referred to as the accumulated cost of a product when it first arrives in a production department. The unit cost of a product is determined by dividing total costs charged to the production department by the output of that department.

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