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In like manner, a finished goods inventory will also have an inventoriable cost. This will include not only all the costs related to the raw materials, but also the direct labor and any fixed or variable overhead that is incurred while producing those finished goods. If those goods are stored at a rented facility, even the cost of the rental will be accounted for as an inventoriable cost.
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.