The specific identification formula 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 of costing inventories is most suitable for companies that sell a small number of expensive, easily distinguishable items. This method allows for the direct matching of costs with the specific items sold, which is practical when each item's cost is distinct and can be identified separately, such as in the case of high-value or unique items.

The Specific Identification Formula of Costing Inventories Is Used When