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.
BREAKING DOWN Transferred-In Costs
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 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.