In the past, Taylor Industries has used a fixed time period inventory system that involved taking a complete inventory count of all items each month. However, increasing labor costs are forcing Taylor Industries to examine alternative ways to reduce the amount of labor involved in inventory stockrooms, yet without increasing other costs, such as short-age costs. Here is a random sample of 20 of Taylor€™s items.

a. What would you recommend Taylor do to cut back its labor cost? (Illustrate using an ABC plan.)
b. Item 15 is critical to continued operations. How would you recommend it beclassified?

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ITEM NUMBERUSAGE ANNUAL ITEM ANNUAL NMBER USAGE $ 1,500 12,000 2,200 50,000 9,600 750 2,000 11000 800 15,000 $13,000 600 42,000 9,900 1,200 10,200 4,000 61,000 3,500 2,900 12 13 14 16 17 19 19 10