COST ACCOUNTING
PROCESS COSTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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its materials, labor, and overhead.
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he goods transferred out as computed in the prior department.
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its materials and conversion costs.
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None of these.
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Detailed explanation-1: -Transferred in costs are costs that have been incurred in a prior department on units that have been moved into a subsequent department. They normally include materials, labor and overhead.
Detailed explanation-2: -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.
Detailed explanation-3: -Transferred-in goods are treated as if they are a separate material category that is added at the beginning of the process for the equivalent units and unit cost computations. The transferred-in units have 100% of the work and costs of the prior process.
Detailed explanation-4: -Transferred-in costs are costs transferred from one department to another during processing. During petroleum manufacturing, for example, costs are incurred as the product moves through the various areas.