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What is an inventoriable cost?

An inventoriable cost means that it’s a cost that company incurs in relation to producing goods or services to be sold. If the cost is inventoriable, it means the cost should be capitalized into the inventory balance and only expensed through cost of goods sold when the product/service is sold.

Another way to phrase inventoriable costs are product or manufacturing costs. As the visual below illustrates, this would include direct materials, direct labor, and manufacturing overhead (indirect labor, indirect materials, facility rent, facility utilities, freight-in, etc.).

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