Problem 20-40 (Algo)

In the past, Taylor Industries has used a fixedtime 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 shortage costs. Here is a random sample of 20 of Taylor's items.

ITEM NUMBER	ANNUAL USAGE		ITEM NUMBER	ANNUAL USAGE
1	$	1,800	11	$	13,600
2		12,500	12		900
3		2,500	13		43,200
4		51,300	14		10,400
5		10,100	15		1,500
6		1,100	16		10,700
7		2,300	17		4,400
8		11,500	18		62,600
9		5,500	19		3,900
10		15,600	20		3,300

a. Classify each item in inventory using an ABC plan.