The following table contains data about the inventory for five items at Jones Co

Question

The following table contains data about the inventory for five items at Jones Corporation.

Complete an ABC analysis of the five items that Jones Corporation carries in inventory. Rank-order each item (row) based on "% of Annual Sales Revenue in descending order. (Round your annual sales to the nearest dollar amount and other answers to 1 decimal place.)

Item # Beginning Unit Inventory Ending Unit Inventory Annual Unit Sales Unit Cost 1 220,000 190,000 464,000 $ 21 2 47,000 67,000 123,000 $ 46 3 92,000 104,000 113,000 $ 6 4 270,000 240,000 186,000 $ 12 5 57,000 67,000 200,000 $ 2 Total 686,000 668,000 1,086,000

Explanation / Answer

18,000

The total units sold in according to the items 1,2,3,4,5 are given as 30000, 20000, 12000, 30000, 10000 respectively.

Further calculations are given in the excel sheet attached or the attached screenshots.

The column annual sales revenue in the screenshot is obtained by multiplying the total units sold column with the unit cost column,

the percentage of annual sales revenue is obtained by dividing the annual sales revenue of one item with the total annual sales revenue of all the items and multiplying the remainder by 100. it gives the percentage of annual sales reveue.

Hence by applying the ABC analysis items 1 and 2 can be classified as A, 3 and 4 as B and 5 as C.

em # Beginning Unit Inventory Ending Unit Inventory Unit Cost TOTAL UNITS SOLD 1 2,20,000 1,90,000 $ 21 30,000 2 47,000 67,000 $ 46 20,000 3 92,000 1,04,000 $ 6 12,000 4 2,70,000 2,40,000 $ 12 30,000 5 57,000 67,000 $ 2 10,000 Total 6,86,000 6,68,000

18,000

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