How to Calculate the Cost of Dead Stock?
To determine deadstock, take the following steps,
- Determine the time period for which you wish to calculate deadstock. For example, you might want to calculate deadstock over the last year or quarter.
- Determine which products or items in your inventory have not been sold over that time period. This can be accomplished by analyzing your sales records and comparing them to your inventory records.
- Determine the total cost of the unsold inventory. This comprises the cost of the products or items themselves, as well as any other expenses such as shipping, storage, and handling.
- Divide the entire cost of unsold inventory by the total inventory value for that time period. This will give you a proportion of dead stock.
[Tex]Total~Deadstock~Value~=~(Quantity~of~DeadstocK~Item~1\times Price~per~Deadstock~Item~1)+(Quantity~of~Deadstock~Item~2~\times Price~per~Deadstock~Item~2)+…+(Quantity~of~Deadstock~Item~n\times Price~per~Deadstock~Item)[/Tex]
Suppose you have 10 deadstock goods of type A priced at ₹50 each and 5 deadstock items of type B priced at ₹100 each. The calculation would be:
Total Deadstock Value = (10 × ₹50) + (5 × ₹100) = (500) + (500) = ₹1000.
So, the entire deadstock value in INR is ₹1000.
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