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Hello,
Could you explain what’s the difference between the costs of manufacturing/producing the inventory and the costs of complete?
Thanks.
Hi,
The manufacturing costs are the direct labour costs and direct overheads, which are part of the cost of the inventory.
The costs to complete are not part of the cost but part of the NRV of the item, and are costs that now arise following completion, which originally would not have been anticipated, that then allow the goods to be sold. The example you are likely to see is that finished goods have been damaged and they need repackaging in order to be sold, this cost is a cost to complete.
Thanks
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