Which types of costs are included in the cost of contract manufactured items?

The cost of contract manufactured items includes the expenses related to the items owned by the original equipment manufacturer (OEM). In a contract manufacturing arrangement, the OEM typically provides the specifications, designs, and sometimes even the raw materials required for production. The costs associated with the items owned by the OEM encompass various expenses that contribute to the total cost of the manufactured goods, such as the design costs, any proprietary technology, and expenditures related to production processes.

This understanding highlights how the cost structure in contract manufacturing is influenced by the OEM's contributions, making this the correct choice. While holding costs related to inventory, raw materials alone, or advertising costs may be relevant to overall business operations or other accounting considerations, they do not specifically represent costs associated with the contract manufactured items, which are fundamentally tied to what the OEM provides for the production process.