ABC Analysis Is Based Upon the Principle That

question 114

Multiple Choice

ABC analysis is based upon the principle that:

• A) all items in inventory must be monitored very closely.
• B) there are usually a few critical items, and many items that are less critical.
• C) an item is critical if its usage is high.
• D) more time should be spent on class "C" items because there are many more of them.
• E) as with grade distributions in many MBA courses, there should be more medium-level "B" items than either "A" or "C" items.

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Definitions:

Advertising Costs

Expenses associated with promoting a product, service, or brand to potential customers.

Period Costs

Expenses not directly tied to the production of goods or services, such as selling, general, and administrative expenses, expensed in the period they occur.

Job Cost Sheets

A document or record that captures all costs associated with a specific job or project, allowing for more precise tracking and billing.

Unit Cost Trends

Analysis of how the cost required to produce a single unit of a product changes over time, which can indicate efficiency improvements or the need for adjustments in pricing strategies.