Answer Posted / shivam srivastava

In accounting, ABC stands for activity-based costing. In
inventory or stock management, it's a method of stock
control. It's basic assumption is that not all stock is
equally valuable, therefore doesn't need the same kind of
attention.
So you categorise all your stock according to its cost and
quantity - and create a graph with cost shown on Y axis and
quantity shown on X. From left to right, you place your
stock from highest value to lowest. Typically, you see that
a small portion of stock is the most valuable, and therefore
needs maximum attention and resources - that's called 'A'.
The next most valuable section of stock is B, the next is C
and so on.

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