## Specific Price Method (Cost Price Method)

Definition: materials purchased for a specific job or work order are issued at the exact price at which they were bought.

Storage requirement: each lot of material must be stored and tracked separately with its own account.

Best suited for: non-standard, customised or job-specific products where materials can be tied to a particular job.

### Advantages & disadvantages

Advantages	Disadvantages
Accurate costing — issues reflect the actual cost of the materials used.	Difficult to operate when purchases and issues are frequent.
Ideal for customised / job-specific production.	—

> The strength (exact actual cost) is also the source of the weakness — tracking every lot separately is impractical when there are many fast-moving purchases.

Worked example

### Example 1

A workshop buys a special alloy specifically for Job No. 101 at ₹500/kg. When that alloy is issued to Job 101, it is charged at exactly ₹500/kg — the actual purchase price for that specific lot — regardless of the price of any other alloy in stock. The job cost therefore reflects the true material cost.

⚠️ Common exam mistakes

Trying to apply the specific price method to standard, fast-moving materials with frequent purchases — it becomes unworkable; it suits customised/job-specific materials.
Forgetting that each lot must be stored and accounted for separately for this method to work.

Reference:

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