8. Inventories

Inventories were as follows (in thousands):



		As of	As of
		March 31, 2014	December 31, 2013
Raw materials	$	5,175	5,077
Work in process		64	379
Finished goods		4,975	3,699
Total	$	10,214	9,155

Inventories are measured at the lower of cost, determined on a first-in, first-out basis, or market. Cost includes all costs of conversions, including materials, direct labor, production overhead and amortization of equipment. Raw materials are stated at the lower of cost, determined on a first-in, first-out basis, or market determined by reference to replacement cost. Raw materials are not written down unless the goods in which they are incorporated are expected to be sold for less than cost, in which case, they are written down by reference to replacement cost of the raw materials. Finished goods and work in process are stated at the lower of cost or market. Shipping and handling fees billed to the customers are recorded as sales. Included in the Company’s Statement of Operations as selling, general, and administrative expenses for the three months ended March 31, 2014 were $1.5 million of costs associated with shipping goods to customers.