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What Is ABC Analysis and How Does It Work

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What is ABC analysis and how does it work?


Definitions:

Marginal Subcontracting Cost

The additional cost incurred for outsourcing a unit of production or service beyond the normal capacity.

Layoff Cost

The expenses incurred by a company when reducing its workforce, including severance pay, benefits continuation, and potential legal costs.

Hiring And Training Cost

(new definition) Reflects the financial outlays involved in attracting, selecting, and enhancing the skills of employees to fulfill organizational roles.

Labor Hours

The total number of work hours contributed by employees in a given period, often used as a measure of production, efficiency, and labor cost.

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