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Sometimes referred to as cost of inventory on hand, the inventoriable cost will include not only the cost of purchasing the items that are found in the inventory, but also all expenses that are related to using those items in the creation of products that are ultimately offered for sale.
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.