Which inventory costing method is likely used by a custom boat shop?

The specific-identification inventory costing method is particularly suitable for a custom boat shop because this method tracks the actual cost of each individual item in inventory. In a custom boat shop, each boat is unique and often has a distinct cost associated with its materials, labor, and any customization. By utilizing specific-identification, the shop can accurately account for the precise costs of the boats sold, leading to clearer financial statements and better profit tracking for each individual sale.

Specific-identification allows the business to match specific costs to specific revenue streams, which is essential in industries dealing with high-value, customized products. This level of detail is particularly beneficial for inventory management in a custom environment, where products are not interchangeable, unlike the methods such as FIFO, LIFO, or Weighted Average, which are typically applied to homogeneous inventories where items are similar and easily grouped together.