Muscat Tubes Manufacturing LLC is a manufacturer of television picture tubes. The company must keep various types of materials on hand for the manufacturing process. The store manager is having difficulty keeping track of all the inventory. When compared to last year, the amount of material lost has increased, which is a source of concern for the store manager. He wishes to employ an effective tool for controlling material loss. While exploring, he came across the concept of ABC analysis, which is used by many MNCs around the world. Because he has no background in costing, he is unable to grasp the concept. He asked you to explain the following because you are the company's cost accounting executive: Working/Application of ABC analysis?

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A:

Q: bonds

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Overheads

In cost accounting, overhead refers to those expenses which occur during the operating of a business. Overhead includes the fixed, variable, or semi-variable which is not directly involved with a company product or service. It is very important to analyze overhead expense as it helps the company in determining how much a company must charge for its products and services so that they can generate profit.  Overhead expenses depend upon the nature of the business operations.