How do I determine the cost of missing inventory?

The approximate cost of missing inventory is the difference between1) the cost of the inventory that is actually on hand, and2) the cost of the inventory that should be on hand based on the company's records.

At first, need to determine missing quantity for Inventory Item. Missing Inventory is determined by physical counting in a certain period or any shortage quantity arises between inventory ledger balance and physical balance in any time.

Valuation is determined by Weighted average method or FIFO method based on business practice.   

Put the Formula (FIFO) First-in-first-Out method to deremined the missing inventory...

simp,

prepare the "Inventor Schedule of Qty issued ,Purchased and reminning balance"

From last available information and make some adjsutment  of the inventory movement qty sold and qty purchsed and issued.

if you will be reached at that level where the inventory in hands math other wise the dfference is the missing inventory

and assign the cost by using the method in the company for assiging the cost i.e wt avg cot , FIFO or LIFO

At first we check why it missing  ,and  consider the shelf life 

Using average weight .

If the book value is zero , we go to the market value

Anyway this issues should be covered by clear and written policy in the company 

The approximate cost of missing inventory is the difference between a) the cost of the inventory that is actually on hand, and b) the cost of the inventory on hand the company's records ( Book Value )

If the company uses accounting software along with the perpetual inventory method (and the system is updated, reviewed, and adjusted routinely) then you can subtract the actual inventory on hand from the amounts shown by the software. The difference is the approximate amount of missing inventory.

Missing inventory determined by the difference between Inventory in book Record & Physical check inventory statement

If u identified the missing inventory with100%, you can calculate the inventory value of missing stocks by deducting the inventory as per record (recorded as per the system) from the physical stocks on hand.

And if you do not know the cost value of missed inventory, the current period market value may be added with the cost of goods sold, since closing stock valuation is cost price or market price which ever is lower.

1) Calculate the cost of Sales by Qty Sold  * Cost and then compare the cost of sales by applying the formula Opening Stock + Purchases Less Closing Stock

Any descrepancies between this two figures can be Material which is missing..

2) This can also be cross check with the difference between the value of the physical stock and the value of the  book stock.

The approximate cost of missing inventory is the difference between1) the cost of the inventory that is actually on hand, and2) the cost of the inventory that should be on hand based on the company's records. If the company uses accounting software along with the perpetual inventory method (and the system is updated, reviewed, and adjusted routinely) then you can subtract the actual inventory on hand from the amounts shown by the software. The difference is the approximate amount of missing inventory. If the perpetual inventory method is not used (or the system is not maintained properly) you can do the following:

1. 1. Determine the cost of the inventory when the inventory was last counted. Perhaps this was the previous December31.

1. 1. Determine the cost of all the goods that were purchased since December31.

1. 1. Combine Item1 and Item2 to arrive at the cost of goods available for sale.

1. 1. Determine the cost of goods sold percentage. This is100% minus the company's normal gross profit percentage. (This may appear on the income statements from the previous year.)

1. 1. Multiply the cost of goods sold percentage times the sales since December31. The result is the approximate cost of goods sold.

1. 1. Subtract the approximate cost of goods sold (Item5) from the cost of the goods available (Item3). This is the approximate cost of goods that should be in inventory.

1. 1. Determine the cost of the goods that are actually in inventory.

1. Subtract the cost of the goods that are actually in inventory (Item7) from the cost of goods that should be in inventory (Item6). The difference or shortage is the amount of missing inventory.