Item Costs and Valuation Methods: Specific Method

The Specific valuation method is used to track each particular item in inventory and assign costs to items individually instead of grouping the items together. The cost of each purchased or produced item is determined by the item's lot or serial number. The Specific valuation method is widely used by manufacturers and retailers of technical equipment, healthcare and medical device companies for fast and precise identification of medical equipment and its parts. Pharmaceutical companies, food and beverage manufacturers, cosmetics producers, chemical manufacturers, and agricultural suppliers also use this method.

One of the key benefits of the Specific method is its precise tracking of inventory items and accurate income calculation when sales occur, and assessment of lost revenue due to damages, losses, or returns. This method's accuracy significantly reduces the risk of inventory misplacement or loss.

You assign this valuation method to a stock item by selecting Specific in the Valuation Method box on the General tab of the Stock Items (IN202500) form. You can use the Specific valuation method to stock items only if the Lot and Serial Tracking feature is enabled on the Enable/Disable Features (CS100000) form.

Tracking of Costs for Items with the Specific Method

If the Specific valuation method is assigned to a stock item, the item's quantity and unit cost are recorded in layers. Each cost layer is identified by a serial or lot number of a stock item. When an item is received in a warehouse, the unit cost assigned to the item will remain the same until the item is issued, used as a component, or sold. If for an item with the same lot number a new receiving document is released, the cost of the layer is updated.

If an item has the Specific valuation method assigned, costs of its units may be different, and the Unit Cost box on the Issues (IN302000) form displays the last unit cost for the item. You can open the Line Details dialog box on the Issues form to view particular items to be issued or to select them by lot or serial numbers. When the issue is released, the system will issue the item based on the cost of a particular issued lot or serial number, and the Unit Cost and Ext. Cost values on the Issues form will be automatically updated.

You can review a lot or serial-tracked item's cost per lot or serial number in the Estimated Unit Cost column on the Inventory Summary (IN401000) form if the Expand by Lot Serial Number check box selected.

Example of Cost Calculation for the Specific Method

Suppose that a stock item was purchased as follows:

• May 19, 100 items starting with the serial number 11023423 at $2.00 each
• May 21, 100 items starting with the serial number 11023523 at $2.10 each
• May 19, 100 items starting with the serial number 11023623 at $1.90 each
• May 19, 100 items starting with the serial number 11023723 at $2.20 each

The total stock cost is $820. When items with the serial numbers 11023444 and 11023666 are sold—that is, the item is issued from the warehouse—the unit costs recorded to the COGS account are $2.00 and $1.90 respectively.