Question

All EXCEPT which of the following statements about ABC analysis are TRUE? ABC analysis suggests that there are the critical few and the trivial many inventory items. In ABC analysis, inventory may be categorized by measures other than dollar volume. ABC analysis suggests that all items require the same high degree of control. ABC analysis is an application of the Pareto principle. ABC analysis categorizes on-hand inventory into three groups based on annual dollar volume.

Answer 1

Answer:

The correct answer is ABC analysis suggests that all items require the same high degree of control.

Explanation:

Each item classified under an activity requires low or high controls, depending on its nature in the production process. The representative units within the total inventories will be classified within a high control; units in a second degree of importance must have periodic controls, but in a lesser quantity than the previous one; and finally the units classified in a third grade will have a routine control system where an in-depth study of physical counting is not required.