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By Weighted Average Method
Where Inventory cannot be measured or weighted due to its nature (hazardous, volatile) then specific techniques are used for such type of counting. For example flow Counters or dips in case of liquids like petrol. In case of radioactive Uranium, special gadgets are used to measure its weight.
In case of materials in very large volumes like Concrete or open cement, volume is of the same is measured and then it is multiplied with its density to calculate its weight.
Hope this is clarifies the issue.
Periodic inventory system is to be used means opening balance is once counted and then all purchases are added to those opening balances in order to have available for sale then at year end again count the physical inventory and deduct that from available figure for the purposes of arriving at the figure of Cost of Sales.
try using a different way to calculate your inventory like ABC analysis which wil help you alot about this situation
i am agreed with mr. khalid noor..
Inventory will be valued in Accounts through Weighted Average Method.
A combination of flow counter analysis and weighted avarege methond is the most appropriate.Then get the arithmetrical mean of the the product of the two .With this error is minimal less than one persent.
IAS -2- iinventories as well as IFRS dose not permit the use of last-in, first out (LIFO) furmula to measure the cost of inventories. as well as dose not permit exchange diffirence.
- The cost of inventories shall be assigned by using the first-in, first out ( FIFO) or weighted average cost furmula, an entity shall use the same cost formula for all inventories having a similar nature and use to the entity. For inventories with a different nature ore use, different cost furmulas maybe justified.
Inventories - closing balance shall be measured at the lower of cost and net realisable value whichever is less
inventory management system linked with hr
If inventory count and weight are big challenges it is best to hire expert. Results should be corraborated through work back or work forward considering results of previous inventory counts and adjusting receipts and despatches during the period.
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