Epsilon Manufacturing Co.

Scenario: Inventory Management

Product	Beginning Inventory (units)	Purchases (units)	Sales (units)	Ending Inventory (units)	Cost per Unit ($)
Product X	3,000	2,000	2,500	2,500	50
Product Y	2,500	1,800	1,900	2,400	60

Requirements:

1. Inventory Valuation:
   • Calculate the cost of goods sold (COGS) for Product X and Product Y using the weighted average cost method, applying marginal costing principles.

1. Inventory Turnover Ratio:
   • Compute the inventory turnover ratio for both Product X and Product Y and explain its significance in evaluating inventory management efficiency, considering marginal costing insights.

1. Just-in-Time Inventory System:
   • Discuss the advantages and disadvantages of implementing a just-in-time inventory system for Epsilon Manufacturing Co. based on the inventory data provided and marginal costing principles.

1. ABC Analysis:
   • Perform an ABC analysis to classify Product X and Product Y based on their annual sales revenue and recommend appropriate inventory management strategies for each category, integrating marginal costing concepts.

1. Inventory Optimization:
   • Recommend two strategies Epsilon Manufacturing Co. could adopt to optimize its inventory levels and reduce carrying costs based on the inventory turnover ratio analysis and marginal costing insights.