there can be several factors which can cause this such as receiving wrong quantities, over invoicing, under invoicing, theft, returns, breakage, etc.

calculating on current costs or past costs for your physical inventory

depending what the nature of your business is the factors vary but doing the year end physical inventory and adjusting your GL inventory account shows a better idea on what is generally a loss.

there can be several factors which can cause this such as receiving wrong quantities, over invoicing, under invoicing, theft, returns, breakage, etc.

calculating on current costs or past costs for your physical inventory

depending what the nature of your business is the factors vary but doing the year end physical inventory and adjusting your GL inventory account shows a better idea on what is generally a loss.

hi I am experiencing the same , but i strongly believe its due to some reports which are not given to us and such reports cause variance, or BOMs are not defined properly.

I am matching now the physical qty. anb BV qty and seeing the high percentage difference items and trying to figure out.

Hope it helps/