Question

Which of the following is included in the costs transferred out of the second process of a three-step production process?

A. Costs incurred in the current process
B. Costs incurred in the previous process
C. Costs of the previous process combined with costs of the current process
D. Costs of the current process combined with costs of the next process

Answer 1

The costs transferred out of the second process in a three-step production process include both the costs from the previous process and the costs incurred in the current process, highlighting the cumulative production costs.

Step-by-step explanation:

The costs transferred out of the second process of a three-step production process include C. Costs of the previous process combined with costs of the current process. This comprises all costs accumulated from the first process, known as the previous costs or work-in-process costs, and the costs incurred during the second process itself, typically variable and fixed costs associated with that stage. These costs are then transferred to the next process, reflecting the cumulative production cost at that point.