The specific identification method of costing inventories is used when the
A)physical flow of units cannot be determined.
B)company sells large quantities of relatively homogeneous items.
C)company has sophisticated technology to account for its inventory.
D)company sells a small number of expensive, easily distinguishable items.

Question

Quizplus · Accepted Answer

The specific identification method is most appropriate for companies that sell a small number of expensive, easily distinguishable items. This method involves assigning the actual cost of each item to that specific unit, rather than using an average cost for all units. For example, a jewelry store selling unique, high-end pieces would benefit from using this method to accurately determine the cost of goods sold and the value of remaining inventory.

The Specific Identification Method of Costing Inventories Is Used When