Why Would a Firm Perform ABC Cost Analysis

question 79

Multiple Choice

Why would a firm perform ABC cost analysis?

• A)to identify the best inventory supplier
• B)to reconcile accounts payable
• C)to prioritize physical inventory counts
• D)to verify production quality

---

Definitions:

Compounded Annually

A method of calculating interest where the interest amount is added to the principal sum at the end of each year, affecting the total interest for the next year.

Interest on Interest

The compound interest that is calculated not only on the initial principal but also on the accumulated interest of previous periods.

Time Value

The principle that current money has a higher value than the same amount would in the future, given its potential to earn more.

Money

A medium of exchange that is widely accepted in transactions for goods and services, acting as a unit of account, a store of value, and sometimes, a standard of deferred payment.