Question

The manufacturing cost that is transferred from one production process to another (for example, from production to packaging) is called the:

a. beginning Work in Process Inventory cost.

b. ending Work in Process Inventory cost.

c. transferred-in cost.

d. accumulated cost of goods.

Answer 1

Solution : The correct answer is C. Transferred-in-cost

Both beginning and ending Work in Process INventory costs are not costs that are transfered but they are an outcome of the prodcution process at various levels of completion.

Accumulated cost of goods would include all the production costs till the level of finished inventory.

However, the manufacturing costs that are transfered from one deprtment to another are the transferred-in-cost . In order the production cycle to get complete , an entire cycle of process flow should be followed step by step. These costs are transferred from one process to the other . In case of the above question, all the production cost shifts to the packaging department to complete the packaging requirement. These are typically transferred- in costs.