Enter the quantity of each specific item sold and the purchase cost of each specific item into the calculator to determine the cost of goods sold. This calculator can also evaluate any of the variables given the others are known.

Specific Identification Formula

The following formula is used to calculate the cost of goods sold (COGS) using the Specific Identification method.

COGS = ∑ (Q * P)

Variables:

• COGS is the cost of goods sold (\$) Q is the quantity of each specific item sold P is the purchase cost of each specific item (decimal)

To calculate the cost of goods sold using the Specific Identification method, multiply the quantity of each specific item sold by the purchase cost of each specific item. Sum up the results for all items sold.

What is a Specific Identification?

Specific Identification is an inventory valuation method used by companies to track each individual item in their inventory. It involves identifying and recording the cost of each specific item sold and those remaining in inventory. This method is most suitable for businesses dealing with unique, high-value items such as automobiles, jewelry, or real estate. It provides a high level of accuracy in tracking inventory, but can be time-consuming and complex to implement.

How to Calculate Specific Identification?

The following steps outline how to calculate the Cost of Goods Sold (COGS) using the Specific Identification method.

1. First, determine the quantity of each specific item sold (Q).
2. Next, determine the purchase cost of each specific item (P) in decimal form.
3. Multiply the quantity (Q) by the purchase cost (P) for each specific item.
4. Sum up the results of the previous step to get the total cost of goods sold (COGS).
5. Finally, calculate the COGS using the formula COGS = ∑ (Q * P).

Example Problem:

Use the following variables as an example problem to test your knowledge.

Quantity of each specific item sold (Q): 10, 5, 8

Purchase cost of each specific item (P) in decimal form: 2.50, 3.75, 1.80

Calculate the cost of goods sold (COGS) using the formula COGS = ∑ (Q * P).