Per IRS Pub 334, "If you want to change your method of accounting for inventory, you must file Form 3115, Application for Change in Accounting Method."
Report all the materials you purchased during the year, even if they were not used in sold goods. That is the purpose of the inventory entries - to track unfinished goods, as well as the cost of good that were sold.
Additional Information: IRS Pub 334 Inventories
@BrooklynCarol
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