Do not add any administrative or selling costs to the cost of inventory. The costs that can be included in an inventory valuation are: Direct labor. Direct materials.

What is included in cost of inventory?

The cost of inventory includes the cost of purchased merchandise, less discounts that are taken, plus any duties and transportation costs paid by the purchaser. ... Technically, inventory costs include warehousing and insurance expenses associated with storing unsold merchandise.

What is not included in inventory?

Inventory includes Raw material, semi finished goods and finished products. So, here consumer goods which are sold to the households during the accounting year will not be included in inventory.