Not automatically. For an inventory-cost figure prepared under IAS 2, include only the portion of purchasing admin time directly attributable to bringing inventory to its present location and condition. General administrative overhead that does not contribute to that outcome is excluded.
For internal unit-economics analysis, the remaining purchasing time can still be shown separately as an operating cost. This keeps it visible without treating every administrative activity as part of ingredient or inventory cost.
Which costs belong in the ingredient-cost figure?
IAS 2 provides a practical dividing line:
| Cost or activity | Treatment under IAS 2 |
|---|---|
| Costs of purchase | Include |
| Other costs required to bring inventory to its present location and condition | Include when they meet the standard |
| General administrative overhead that does not contribute to bringing inventory to that condition | Exclude |
| Transport and handling directly attributable to acquiring inventory | Include |
| Purchasing admin time | Assess the underlying activity rather than including every hour automatically |
The cited passages do not expressly name “purchasing admin time” or prescribe how staff hours must be allocated. The relevant question is therefore what the time contributes to acquiring the inventory and bringing it to the required location and condition—not simply whether the employee performs a purchasing role.
How to check the treatment
Start by separating time spent on specific purchasing activities from general administration. For each activity, ask whether it directly contributes to acquiring the inventory or bringing it to its present location and condition. If it does not, it should not be added to inventory cost merely to make the figure appear more complete.
Transport and handling require particular care because IAS 2 expressly lists them among costs directly attributable to acquiring inventory. They should therefore be captured as attributable acquisition costs rather than hidden inside an undifferentiated purchasing or administration figure.
If purchasing time appears in a broader cost report but is excluded from inventory cost, it can remain visible as a separate operating-cost item. That distinction helps decision-makers assess the full cost of purchasing without weakening the accounting boundary.
What the reader must still confirm
Before adopting a calculation method, confirm:
- whether the intended figure is an IAS 2 inventory cost or an internal recipe-cost measure;
- which purchasing activities directly contribute to acquiring inventory and bringing it to its present location and condition;
- how shared staff time will be supported and allocated; and
- whether the treatment is consistent with the business’s applicable accounting policy.
The cited IAS 2 material establishes the treatment of attributable purchase, transport, handling and inventory-preparation costs, as well as the exclusion of non-contributory administrative overhead. It does not provide a specific formula for converting purchasing admin hours into ingredient cost, so any internal allocation method still requires separate documentation and professional confirmation.