Given the Information Below, Conduct an ABC Analysis and Suggest

question 2

Essay

Given the information below, conduct an ABC analysis and suggest which items should be classified as A, B, and C. $\begin{array}{|c|c|c|}\hline\text { SKU } & \text { Annual Usage } & \text { Item Value }(\$) \\\hline 1 & 9,000 & 80.00 \\\hline 2 & 12,000 & 58.80 \\\hline 3 & 24,000 & 76.20 \\\hline 4 & 42,000 & 48.00 \\\hline 5 & 55,000 & 30.00 \\\hline 6 & 140,000 & 2.20 \\\hline 7 & 33,000 & 48.00 \\\hline 8 & 3,000 & 110.00 \\\hline\end{array}$

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Definitions:

Allowance for Doubtful Accounts

A balance sheet account representing the estimated percentage of accounts receivable that may not be collected.

Net Credit Sales

The total value of credit sales minus returns and allowances over a specific period, indicating the true revenue generated from credit transactions.

Accounts Receivable

The sum customers owe a company in exchange for products or services that have been delivered or utilized, pending settlement.

Interest Calculation

The process of determining the amount of interest owed or earned over a specified time period, based on the principal amount and the rate of interest.