Transferred-In Costs

By
Will Kenton
Full Bio
Will Kenton is an expert on the economy and investing laws and regulations. He previously held senior editorial roles at Investopedia and Kapitall Wire and holds a MA in Economics from The New School for Social Research and Doctor of Philosophy in English literature from NYU.
Learn about our editorial policies
Updated July 30, 2021
Reviewed by
Charlene Rhinehart
Charlene Rhinehart
Reviewed by Charlene Rhinehart
Full Bio

Charlene Rhinehart is a CPA , CFE, chair of an Illinois CPA Society committee, and has a degree in accounting and finance from DePaul University.

Learn about our Financial Review Board
Fact checked by
Ariel Courage
Ariel Courage Headshot
Fact checked by Ariel Courage
Full Bio

Ariel Courage is an experienced editor, researcher, and former fact-checker. She has performed editing and fact-checking work for several leading finance publications, including The Motley Fool and Passport to Wall Street.

Learn about our editorial policies
Transferred-In Costs

Investopedia / Michela Buttignol

What Are Transferred-In Costs?

Transferred-in costs are costs accumulated during the upstream production processes within a company. Transferred-in costs are the costs accumulated by the product at any given point in production. They are "transferred in" to the new business department that receives the partially finished product and is responsible for continuing the production process. Transferred-in costs combine manufacturing costs by the various departments and production processes.

Key Takeaways

  • Transferred-in costs are costs accumulated during the upstream production processes within a company.
  • Transferred-in costs combine manufacturing costs by the various departments and production processes.
  • They are typically used for companies that produce continuous similar units through a series of operations such as petroleum, chemical, textile, and food processing companies.
  • For example, if department A is responsible for starting a widget, and department B is responsible for finishing the widget, the costs incurred during production in department A would be "transferred-in costs" for department B.
  • Transferred-in cost is also referred to as the accumulated cost of a product when it first arrives in the production department.

How Transferred-In Costs Work

Transferred-in costs are 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.

Example of Transferred-In Costs

If department A is responsible for starting a widget, and department B is responsible for finishing the widget, the costs incurred during production in department A would be "transferred-in costs" for department B who is responsible for continuing the production process. Transferred-in cost is also referred to as the accumulated cost of a product when it first arrives in the production department. The unit cost of a product is determined by dividing the total costs charged to the production department by the output of that department.

Open a New Bank Account
×
The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace.
Sponsor
Name
Description