Question (b)

Question 3 A company does an ABC analysis of its inventory and calculates that out of 5000 items, 22% can be classified as A items, 33% as B items, and the remainder as c items. A decision is made that A items are to be cycle counted once a month, B items every 3 months, and C items twice a year. The company works 5 days per week and 50 weeks per year. + Count Number of Frequency counts per per year year Number of Items Classification % of Total Counts Counts per Day 53 4 26 18 A 1,100 12 13,200 54.32% B 1,650 6,600 27.16% 2,250 2 4,500 18.52% Total counts per year 24,300 Workdays per year 250 Counts per day 97 a) Calculate the total counts and the counts per day by classification. 100.00% [10 marks) b) Compare the TWO (2) basic inventory accuracy audit methods between Cycle- counting versus Annual physical inventory. [15 marks)