When units are moved from one processing department to the next, the cost associated with those units must also be moved from one WIP account to the next. What are these costs called?

Question

Business

Abel Johnston

11 December, 10:24

When units are moved from one processing department to the next, the cost associated with those units must also be moved from one WIP account to the next. What are these costs called?

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Russell Calderon · Answer 1

These costs called as Transferred costs.

Explanation:

The costs that are accumulated during the time of upstream production process in a firm refers to Transferred costs. These are associated with the goods that are transferred to the next department of a business from one department. With this product there will be a continuation of the production process.

These are semi finished goods that are transferred for the purpose of continuing the production process. When these units are moved form the processing department to the next department, these transferred cost will be transferred from one work in process account to the next account.