Your manager asked you to categorize the five inventory items carried in your store. The annual volume (units) as well as the unit cost are provided for these items (P1, P2, P3, P4, P5):

Item	Annual volume (units)	Unit cost ($)
P1	400	30
P2	75	200
P3	50	50
P4	200	150
P5	150	75

You decide to make an ABC analysis based on annual dollar volume. Which item would you consider to be the most critical?

• P1 since it has the highest annual unit volume

• B.

  P1 since it has the highest annual dollar volume

• C.

  P2 since it has the highest annual dollar volume

• D.

  P2 since it has the highest unit cost

• E.

  P4 since it has the highest annual dollar volume