specific identification method

The specific identification method is a method of determining inventory cost under which the actual cost of a particular item is assigned to that item; Used to determine cost of goods sold.

Specific identification assigns the actual cost of each specific inventory item to that item, suitable for unique or high-value items.

- Used in product/service costing, budgeting, and variance analysis.
- Used to support pricing decisions and profitability analysis by cost behavior and drivers.

- Example: The costing team uses **specific identification method** to allocate costs and analyze margins by product line.

- Why it matters: Improves cost accuracy, supports better pricing and budgeting, and strengthens performance measurement.