MGT$1218$ Inventory & Materials Management Assignment $1$

Amalgamated Fenderdenter's sales are $$12$ million. The company spends $$3\mathrm{.}7$ million for purchase of direct materials and $$3\mathrm{.}4$ million for direct labor; overhead is $$3\mathrm{.}5$ million and profit is $$1\mathrm{.}4$ million. Direct labor and direct material vary directly with sales, but overhead does not. The company wants to increase its profit by $50\%.$

a$)$ By how much should the firm increase annual sales?

b$)$ By how much should the firm decrease material costs?

c$)$ By how much should the firm decrease labor cost?

Assume the following transactions have occurred regarding a specific SKU in $2022$ :

Ending inventory in $2021$ of $100$ units valued at $$1,175.$

January $15,$ purchased $1000$ units at $$12\mathrm{.}00$ per unit

January $31,$ sold $450$ units at $$15\mathrm{.}50$ per unit

February $19,$ sold $120$ units at $$15\mathrm{.}50$ per unit

March $3,$ purchased $500$ units at $$13\mathrm{.}00$ per unit

March $25,$ sold $500$ units at $$16\mathrm{.}00$ per unit

April $16,$ sold $250$ units at $$16\mathrm{.}50$ per unit

May $20,$ sold $80$ units at $$17\mathrm{.}00$ per unit

June $6,$ purchased $1000$ units at $$13\mathrm{.}50$ per unit

July $13,$ sold $800$ units at $$16\mathrm{.}00$ per unit

August $25,$ purchased $1200$ units at $$14\mathrm{.}00$ per unit

October $17,$ sold $950$ units at $$17\mathrm{.}00$ per unit

Determine the ending inventory and cost of goods sold using the three methods of inventory valuation: FIFO, LIFO, and weighted average method.

Algonquin Corporation, a major producer of consumer electronics equipment, has decided to initiate a program to analyze the company's inventory requiremients utilizing different inventory techniques. The first phase of this program consists of an ABC analysis of the company's product line shown in the table below.

$\backslash$table$[[$Item Code,$\backslash$table$[[$Units$],[$Sold$]],\backslash$table$[[$Price per$],[$Unit$]],\backslash$table$[[$Profit per$],[$Unit$]]],[$SR$101,15000,250,50\mathrm{.}50],[$SR$103,750,1500,330\mathrm{.}00],[$SR$105,1600,600,90\mathrm{.}00],[$SR$201,45,2250,877\mathrm{.}50],[$SR$203,10,3500,1750\mathrm{.}00],[$SR$205,9250,500,125\mathrm{.}00],[$SR$301,700,650,195\mathrm{.}00],[$SR$303,550,700,196\mathrm{.}00],[$SR$305,3000,920,303\mathrm{.}60],[$SR$500,100,1100,440\mathrm{.}00]]$

a$)$ Perform ABC analysis based on the criterion of annual dollar revenue.

b$)$ Perform ABC analysis based on annual profit.

c$)$ For both parts a and b$,$ explain your reasoning to come up with the cutoff levels.

$4.$ A company has classified its inventory into ABC items, and created $4$ classes: $A,B,C,$ and D$.$ The company has a total of $12,000$ items, $15\%$ of which are A items, $30\%$ are B items, $50\%$ are $C$ items, and $5\%$ are $D$ items. The company decided that A items will be counted once a month, B items once every $3$ months, $C$ items once every year, and D items twice a month. The company works $5$ days a week, and $48$ weeks a year.

Develop a schedule of the counts for each class of item.