Fifth edition Alnoor Bhimani Charles T. Horngren Srikant M. Datar Madhav V. Rajan Farah Ahamed

Transferred-in costs in process costing

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Assembly Testing

Transferred-in costs in process costing
Students have trouble with transfers-in. In the Euro-Défense example, units cannot begin Testing until they are completely assembled. These transferred-in (TI) Assembly Department costs act like DM, which are added at the very beginning of the Testing process. A timeline helps students understand the process.

Assembly

Testing

62.5%
80%

DM

DM Added
Added

Opening stock SC
Closing stock During the current period, the testing process at Euro-Défense will Finish the
Opening stock
(0% TI,
37.5% CC,
100%
DM)
SC
(100% of TI,

CC and DM) Start the
Closing stock
(100% TI,

80% CC

0% DM)

Bhimani, Horngren, Datar and Rajan, Management and Cost Accounting, 5
th
Edition, Instructor’s Manual
© Pearson Education Limited 2012

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