CA Intermediate · Cost and Management Accounting · Material Cost
Which of the following inventory control techniques classifies items on the basis of their usage frequency and movement speed, namely Fast, Slow and Non-moving, rather than on their value?
FSN analysis is correct. It groups materials as Fast moving, Slow moving and Non-moving according to how quickly they are issued or consumed. ABC uses consumption value, VED uses criticality and HML uses unit price, so none of those is based on movement speed.
- AABC analysis
- BFSN analysisCorrect
- CVED analysis
- DHML analysis
Explanation
FSN analysis classifies items by the rate of consumption or movement: Fast moving, Slow moving and Non-moving. ABC analysis is based on value of consumption, VED on criticality, and HML on unit price. Hence FSN is the correct answer.
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