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A small toy store has organized its 10 inventory items on an annual dollar-volume basis. The information below shows the items, their annual demands, and unit costs. How should the store classify these items into groups A, B, and C?
Item Number Annual Volume (Units) Unit Cost ($)
Item 1 300 $10
Item 2 1000 $30
Item 3 500 $60
Item 4 100 $2
Item 5 1500 $20
Item 6 600 $50
Item 7 2000 $1.50
Item 8 900 $70
Item 9 1200 $2.00
Item 10 700 $40

Sagot :

anthougo

Answer:

Classification:

Groups      Annual Dollar-Volume

 

A                  Above $30,000:

Item           Annual Volume  Unit Cost    Total Cost

Item 8              900                 $70         $63,000

B                  Above $3,000:

Item           Annual Volume  Unit Cost    Total Cost

Item 2              1,000                $30          $30,000

Item 3                500                $60          $30,000

Item 5             1,500                 $20         $30,000

Item 6               600                 $50         $30,000

Item 10              700                 $40         $28,000

C                 $3,000 and Below

Item           Annual Volume  Unit Cost    Total Cost

Item 1                300                 $10             $3,000  

Item 4               100                   $2                $200  

Item 7           2,000               $1.50             $3,000  

Item 9           1,200              $2.00             $2,400

Explanation:

a) Data and Calculations:

Item           Annual Volume  Unit Cost    Total Cost

Number            (Units)                ($)               ($)

Item 1                  300                 $10           $3,000

Item 2              1,000                $30         $30,000

Item 3                500                $60         $30,000

Item 4                100                   $2              $200

Item 5            1,500                 $20         $30,000

Item 6              600                 $50         $30,000

Item 7           2,000               $1.50           $3,000

Item 8              900                 $70         $63,000

Item 9           1,200              $2.00           $2,400

Item 10            700                 $40         $28,000

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