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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.
There are several layers of costs that must be treated as inventory. The Internal Revenue Service provides guidance under IRC Sec. 471 for the inclusion in inventory of direct costs and certain indirect costs. Direct costs are the costs of grapes, bottles, corks, labels, and direct labor. Indirect costs that are required to be included in inventory are certain repairs, maintenance, utilities, rent, indirect and supervisory labor, indirect materials and supplies, tools and equipment, and inspection.