(a) The requirement is to determine which of the costs
is not included in inventory under the Uniform Capitalization
(UNICAP) rules for goods manufactured by a taxpayer.
UNICAP rules require that specified overhead items must be
included in inventory including factory repairs and maintenance,
factory administration and officers’ salaries related to production,
taxes (other than income taxes), the costs of quality control and
inspection, current and past service costs of pension and profitsharing
plans, and service support such as purchasing, payroll,
and warehousing costs. Nonmanufacturing costs such as selling,
advertising, and research and experimental costs are not required
to be included in inventory.