Question

You own Souvenir Gallore, a souvenir shop on Lane Avenue. You would like to do an ABC analysis based on annual dollar usage. You sell the following list of retail items in your store. Items Annual demand (units) Unit cost Greeting cards 1000 $1.50 Key chains 967 $2.50 Scented candles 700 $5.00 Caps 700 $8.50 Calendars 650 $9.00 Watches 1020 $65.00 The ABC class that Calendars belong to is ___________

Answer 1

Answer:

Calendar belongs to  B category

Explanation:

The computation of ABC class that Calendars belong is shown below:-

Items     Annual demand     Unit cost    Total cost      Category

Watches     1,020                       $65        $66,300            A

Caps            700                          $8.5      $5,950              A

Calendars   650                          $9          $5,850              B

Scented

candles        700                           $5       $3,500                B

Key chain     967                           $2.5     $2,417.5             C

Greeting

cards           1,000                       $1.5       $1,500                  C

Here, for computing the total we simply multiply the annual demand with unit cost of each items. Also we have categorized the A, B and C into values which means A has highest value, B is lower than A and C has the lowest value in compare of A and B.

Therefore, as per the requirement the Calendar belongs to  B category.