CMRP 2023 STUDY GUIDE WITH COMPLETE SOLUTION

ABC, Activity based costing - ANSWER Usually refers to costing method that breaks down overhead costs into specific activities (cost drivers) in order to more accurately distribute the costs in product costing. Has also been applied to customer and vendor management. ABC stratification - ANSWER Method used to categorize inventory into groups based upon certain activity characteristics. Examples of ABC stratifications would include ABC by velocity (times sold), ABC by sales dollars, ABC by quantity sold / consumed, ABC by average inventory investment, ABC by margin. ABC stratifications are used to develop inventory-planning policies, set count frequencies for cycle counting, slot inventory for optimized order picking, and other inventory management activities