Some points to remember when accounting for transferred-in costs are:
Be sure to include the transferred-in costs from previous departments in your calculations.
When calculating the costs to be transferred using the FIFO method, do not overlook costs assigned in the previous period to units that were in process at the beginning of the current period but are now included in the units transferred. For example, do not overlook the $51,600 in Exhibit 18-11.
Unit costs may fluctuate between periods. Therefore, transferred units may contain batches accumulated at different unit costs. For example, the 400 units transferred in at $52,480 in Exhibit 18-11 using the FIFO method consist of units that have different unit costs of direct materials and conversion costs when these units were worked on in the assembly department (see Exhibit 18-7). Remember, however, that when these units are transferred to the testing department, they are costed at one average unit cost of $131.20 , as in Exhibit 18-11.
Units may be measured in different denominations in different departments. Consider each department separately. For example, unit costs could be based on kilograms in the first department and liters in the second department. Accordingly, as units are received in the second department, their measurements must be converted to liters.