The Specific Identification Method of Costing Inventories Is Used When

question 5

Multiple Choice

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.

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Definitions:

Units Sold

The total quantity of products that a company has sold to its customers during a particular time frame.

Net Income

The total earnings of a company after all expenses and taxes have been deducted from revenue.

Contribution Margin

The amount remaining from sales revenue after variable expenses are deducted, used to cover fixed costs and generate profits.

Gross Margin

Gross Margin is the difference between revenue and the cost of goods sold, divided by revenue, expressed as a percentage. It indicates the percentage of revenue that exceeds the cost of goods sold.