Item Costing is the practice of accurately assessing the cost of each unit in an inventory. It involves tracking material costs, labor costs, overhead expenses, shipping fees and other associated costs that come with acquiring an item. By calculating these individual costs, businesses can get a detailed understanding of the true cost of their inventory – enabling them to better manage their finances and make informed decisions about pricing and purchasing. Item Costing is an invaluable tool for any business looking to stay ahead of the competition and maximize their profits.