What are actual costs in the context of inventory management?

In the context of inventory management, actual costs refer to the real expenses incurred for purchasing and holding inventory. These costs include the purchase price of the inventory items, along with any additional costs such as shipping, handling, and any overhead associated with storage. Therefore, option B accurately represents actual costs as it relates to the tangible inventory you currently possess.

Actual costs differ from theoretical costs calculated by software, which might estimate how much inventory would theoretically cost based on projections rather than actual expenditures. Similarly, planned inventory levels pertain to what is scheduled or forecasted, not necessarily reflecting what has been spent or the items currently in stock. Future costs are speculative, dealing with potential future expenses rather than reflecting incurred costs. Thus, focusing on what you actually have on hand provides precise insight into the financial impact your current inventory has on your overall financial status.