The inventory is valued by attaching a monetary value to all the items contained in the inventory of an organization. In the inventory valuing, all the cost involved in bringing the inventory items in place and ready for sale including the cost of administration and sale. Inventory value states the total value of the items owned by the company and the amount of money spent on them.
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In most cases, the cost includes the cost incurred to acquire an item together with the cost of the administration of that item while on the inventory. In cases where there is value addition on an item, the cost may also include value addition cost. The cost of administration may include the costs of services spent to avail the product to the final user.