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Writer's pictureakash shukla

Concept of Costing Method: Specific

Updated: Oct 1, 2023

Specific costing is a method of determining the cost of a particular item or product by tracking and assigning the actual costs that are directly associated with producing or acquiring that specific item.

Specific costing, also known as actual costing, is a costing method that assigns actual costs directly to specific units or batches of products.
This method is often used in industries where each unit or batch of production is unique and requires separate cost tracking.


Business Scenario
Imagine a custom furniture manufacturing company that produces handcrafted pieces of furniture like tables and chairs. Each piece of furniture is unique, and the company uses specific costing to determine the cost of each item.

Let’s explore how GL entries, COGS and Value entries will be created in Business Central.

Create an Item with Specific Costing Method
If you attempt to assign the specific costing method when creating an item, you will encounter an error related to item tracking.
Ensure that item tracking is enabled first, and subsequently, you can proceed to assign the costing method without any issues.


To comply with the specific costing method, Serial Number tracking should be chosen over Lot tracking as the Item Tracking code


Purchase Scenario
Post-purchase invoice based on the below table:


Below are the GL entries



Below are the Item ledger entries and Value entries


As you're already aware, when a business utilizes serial numbers as tracking codes, it becomes necessary to allocate a distinct serial number to each individual quantity.

Sales Scenario
Post the sales invoice with a quantity of 2 and ensure that you select two distinct serial numbers for these items in item tracking lines.


The COGS amount is determined by calculating the cost of the items that were sold, and this calculation is typically based on the purchase cost of those items.


The adjustment entry will be posted in the same manner as in the FIFO


I hope you find this information helpful and useful for future reference.


Cheers….. 😊


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