Perform an ABC Analysis on the Following Set of Products

question 69

Essay

Perform an ABC analysis on the following set of products.
$$\begin{array} { | c | c | c | } \hline \text { Item } & \begin{array} { c } \text { Annual } \\\text { Demand }\end{array} & \text { Unit Cost } \\\hline \text { A211 } & 1200 & \$ 9 \\\hline \text { B390 } & 100 & \$ 90 \\\hline \text { C003 } & 4500 & \$ 6 \\\hline \text { D100 } & 400 & \$ 150 \\\hline \text { E707 } & 35 & \$ 2000 \\\hline \text { F660 } & 250 & \$ 120 \\\hline \text { G473 } & 1000 & \$ 90 \\\hline \text { H921 } & 100 & \$ 75 \\\hline\end{array}$$

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Definitions:

Predetermined Overhead Rate

A predetermined overhead rate is an estimated rate used to assign overhead costs to products or job orders, based on a specific activity base.

Budget Data

Financial plans containing detailed projections of revenues and expenses for a future period, often used for management control and planning.

Factory Overhead

The indirect costs associated with manufacturing, including expenses like utilities and maintenance not directly tied to the production of goods.

Predetermined Factory Overhead Rate

An estimated rate used to allocate manufacturing overhead costs to individual units of production, based on a standard cost system.