All of the Following Statements About ABC Analysis Are True

question 138

Multiple Choice

All of the following statements about ABC analysis are true except

• A) inventory may be categorized by measures other than dollar volume
• B) it categorizes on-hand inventory into three groups based on annual dollar volume
• C) it is an application of the Pareto principle
• D) it states that all items require the same degree of control
• E) it states that there are the critical few and the trivial many inventory items

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Definitions:

Recapture

A tax provision where previously deducted or credited amounts are added back to income.

Tax Rate

The share of income that is required to be paid to the government by an individual or corporation as tax.

Mutually Exclusive Projects

Projects that, if accepted, preclude the acceptance of any other projects within the same category.

Managerial Decision

The process by which managers choose among alternative strategies or actions to solve organizational problems or to take advantage of opportunities.