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Other costs, such as transportation and even storage of the inventory, are also considered to be inventoriable. For a manufacturing operation, determining the cost of inventory on hand will begin with the actual unit cost of every item that is maintained within an inventory.
Examples of variable costs include direct costs such as raw materials and direct labour. Numerical example of variable costs. A factory is producing widgets. It takes 4m2 to make one widget and it costs $2 per square metre. If the factory makes 50 widgets if costs $400, if the factory makes 100 widgets it costs $800.