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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.
Previously made purchases or investments, such as the cost to build a factory, are called âsunkâ costs and are not included. The Incremental cost can include many different direct and indirect cost inputs depending upon the situation. However, only costs that will change as a result of the decision are to be included.