Illustration of abc analysis, Managerial Accounting

Assignment Help:

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.

1493_table.jpg



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.

824_graph.jpg


Related Discussions:- Illustration of abc analysis

Transfer pricing, find full-cost& variable cost using transfer pricing meth...

find full-cost& variable cost using transfer pricing method

Assigment, taking the role of a consultant, discuss the factors you would c...

taking the role of a consultant, discuss the factors you would consider in selecting a suitable accounting system solutio for a small to medium enterprise. i has to be 1200 q\work

Linear programming, Linear Programming     This section introduces the ge...

Linear Programming     This section introduces the general method called the simplex algorithm, which is designed to solve any linear program. The information that can be secured

Recognition of the organization''s decision, Recognition of the Organizatio...

Recognition of the Organization's Decision Units and Decision Packages ZBB decision unit is an operating division for which decision packages are generated and analyzed. It ca

Net current assets forecasting method, It is the most practical way of esti...

It is the most practical way of estimating working capital needs. In such method, the finance manager gets ready a working capital forecast. While preparing such forecast, firstly

Accounting concepts, implications of applying accounting concepts wrongly

implications of applying accounting concepts wrongly

Permanent abandonment of premises, PERMANENT ABANDONMENT OF PREMISES A ...

PERMANENT ABANDONMENT OF PREMISES A company may find it more profitable to concentrate its output in some factories by closing down others.  The decision, in this instance, is

Define activities based costing by horngren, Define Activities based costin...

Define Activities based costing by horngren According to horngren " ABC is a system that focuses on activities as fundamental cost object and utilizes cost of these activi

Determine the internal factors of pricing decision, Determine the Internal ...

Determine the Internal factors of pricing decision 1) Organization factor: pricing decision occur on two level in the organization. Overall price strategy is dealt with by to

Financial manager''s role in inventory management, Financial manager's role...

Financial manager's role in inventory management The techniques of inventory management are very useful in determining the optimum level of inventory and finding answers to the

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd