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In process manufacturing, some departments invariably receive partially finished goods from prior departments. These transferred in goods are a type of material for the subsequent process that is added at the beginning of the subsequent process . The usual approach is to treat transferred-in goods as a separate material category when calculating equivalent units. In dealing with transferred-in goods, three important points should be remembered. First, the cost of this material is the cost of goods transferred out from the prior department . Second, the units started in the subsequent department (process) correspond to the units transferred in from the prior department . Third, the units of the prior department may be measured differently than the units of the subsequent department. If the units are measured differently, then the units of the second department must be converted to the units of measure used by the second department. For example, if the output of the first department is measured in pounds and the output of the second department is measured in 50 pound bags, then if the first department transfers in 1,200 pounds this would be equivalent to bags in the units of measure for the second department