All EXCEPT Which of the Following Statements About ABC Analysis

question 4

Multiple Choice

All EXCEPT which of the following statements about ABC analysis are true?

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

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Definitions:

Inventory Valuation

The method used by businesses to assess the value of their inventory, taking into account the cost of acquiring or producing the goods and any market changes.

Profitability of Joint Products

The assessment of earnings from products that are produced simultaneously from the same process and cannot be distinguished cost-wise until a certain point of production.

Qualitative Factors

Qualitative factors are non-numeric variables or considerations that affect decision-making, such as company reputation or customer satisfaction.

Buying

The process of acquiring goods or services, typically for business operations or personal use.