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10 Cards in this Set

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ABB
Abbreviation for activity-based budgeting
ABC
Abbreviation for activity-based cost accounting.
ABC analysis
Syn: ABC classification
ABC classification
The classification of a group of items in decreasing order of annual dollar volume (price multiplied by projected volume) or other criteria. This array is then split into three classes, called A, B, and C. The A group usually represents 10% to 20% by number of items and 50% to 70% by projected dollar volume. The next grouping, B, usually represents about 20% of the items and about 20% of the dollar volume. The C class contains 60% to 70% of the items and represents about 10% to 30% of the dollar volume. The ABC principle states that effort and money can be saved through applying looser controls to the low-dollar-volume class items than will be applied to high-dollar-volume class items. The ABC principle is applicable to inventories, purchasing, sales, and so on. Syn: ABC analysis, distribution by value, . See: 80-20, Pareto analysis, Pareto’s law.
ABC inventory control
An inventory control approach based on the ABC classification
ABM
Abbreviation for activity-based management
Abnormal demand
Demand in any period that is outside the limits established by management policy. This demand may come from a new customer or from existing customers whose own demand is increasing or decreasing. Care must be taken in evaluating the nature of the demand: is it a volume change, is it a change in product mix, or is it related to the timing of the order? See: outlier.
ABP
Abbreviation for activity-based planning
Absentee rate
A ratio comparing the number of employee-days lost with the total number of available employee-days of employment during some base period, usually one month.
Absorption costing
An approach to inventory valuation in which variable costs and a portion of fixed costs are assigned to each unit of production. The fixed costs are usually allocated to units of output on the basis of direct labor hours, machine hours, or material costs. Syn: allocation costing. See: activity-based costing