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Illustration: ABC analysis
Combine items on the basis of their relative value to form three categories—A, B and C. The data in the table below illustrates the ABC analysis.
The tabular and graphic representation indicates that "Item A" forms a minimum proportion, 15 per cent of total units of all items, but represents the higher value, 70 per cent. On the other hand, "Item C" represents 55 per cent of the total units and only 10 per cent of the total value. "Item B" occupies the middle place. Items A and B jointly represent 45 per cent of the total units and 90 per cent of the investment. More than half of the net units are item C, representing merely 10 per cent of the investment. Thus, a tighter control should be exercised on "Item A" in order to maximize profitability on its investment. In case of "Item C" simple controls will be sufficient.
What are Selling and distribution expenses? Selling and distribution expenses incurred for the marketing of a commodity, for securing orders for the articles, dispatching goods
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Question 1: (a) ‘The car industry is characterized by broad products differentiation' Analyse the long run situation of a car producer, commenting on profitability and efficien
Illustration: ABC analysis Combine items on the basis of their relative value to form three categories—A, B and C. The data in the table below illustrates the ABC analysis.
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