Question 1

In should-cost modeling, _____ include those components the company has direct control or influence over.

Accepted Answer

A) direct costs 
B) assumption variables 
C) variable costs 
D) decision variables 
E) commodity prices 
A) direct costs 
B) assumption variables 
C) variable costs 
D) decision variables 
E) commodity prices D

Question 2

A seller's cost structure affects price because, in the long run, the seller must price at a level that covers all variable costs of production, contributes to some portion of fixed costs, and contributes to some level of profit.

Accepted Answer

A) True 
 B)False  True

Question 3

At the highest levels of the organization, top management seldom uses break-even analysis as a strategic planning tool.

Accepted Answer

A) True 
 B)False  False

Question 4

In general, low-value generics in which a competitive market with many potential suppliers exists should emphasize total delivered price.

Accepted Answer

A) True 
 B)False

Question 5

If total costs are less than target costs, the design must change or costs must be reduced.

Accepted Answer

A) True 
 B)False

Question 6

Some sellers rely on a detailed analysis of internal cost structures to establish price, whereas others simply price at a level comparable to the competition.

Accepted Answer

A) True 
 B)False

Question 7

Examples of monopolies in the United States include the steel, automobile, and appliance industries.

Accepted Answer

A) True 
 B)False

Question 8

In TCO for capital equipment, _____ are all costs associated with operating the equipment through its life.

Accepted Answer

A) usage costs 
B) end of life costs 
C) opportunity costs 
D) acquisition costs 
E) training costs 
A) usage costs 
B) end of life costs 
C) opportunity costs 
D) acquisition costs 
E) training costs

Question 9

In the _____, pricing is based on the fact that long-run profitability depends on the market share obtained by the supplier.

Accepted Answer

A) price volume model 
B) market-share model 
C) open market model 
D) target pricing model 
E) market skimming model 
A) price volume model 
B) market-share model 
C) open market model 
D) target pricing model 
E) market skimming model

Question 10

In should-cost modeling, _____ refers to the integrity and transparency of the cost model created.

Accepted Answer

A) direct cost 
B) value stream maps 
C) make-or-buy analysis 
D) fixed cost 
E) auditability 
A) direct cost 
B) value stream maps 
C) make-or-buy analysis 
D) fixed cost 
E) auditability

Question 11

The price paid for purchased products and services has no direct impact on the end customer's perception of value provided by the organization.

Accepted Answer

A) True 
 B)False

Question 12

_____ indicates whether a seller can lower its cost as a result of the repetitive production of an item.

Accepted Answer

A) Process capability analysis 
B) Market analysis 
C) Price analysis 
D) Break-even analysis 
E) Learning-curve analysis 
A) Process capability analysis 
B) Market analysis 
C) Price analysis 
D) Break-even analysis 
E) Learning-curve analysis

Question 13

Target pricing is an innovative approach used in the final stages of the new-product development cycle to establish a contract price between a buyer and a seller.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is not one of the categories of products in the strategic cost management matrix?

Accepted Answer

A) Commodities. 
B) One-time buys. 
C) Critical products. 
D) Unique products. 
E) Generics. 
A) Commodities. 
B) One-time buys. 
C) Critical products. 
D) Unique products. 
E) Generics.

Question 15

Under penetration pricing, using final price as a basis, the product is disaggregated into major subsystems, each of which has its own target cost.

Accepted Answer

A) True 
 B)False

Question 16

The value of money spent any time in the future does not depend on the organization's cost of capital.

Accepted Answer

A) True 
 B)False

Question 17

In the _____, suppliers are typically concerned about capacity utilization, covering fixed cost, and retaining skilled labor during market slowdowns, when they are willing to reduce their prices until market conditions change.

Accepted Answer

A) revenue pricing model 
B) market skimming model 
C) penetration pricing model 
D) market-share model 
E) competition pricing model 
A) revenue pricing model 
B) market skimming model 
C) penetration pricing model 
D) market-share model 
E) competition pricing model

Question 18

A major benefit of multiple sourcing is a lower price that results from the higher volumes offered to a supplier.

Accepted Answer

A) True 
 B)False

Question 19

The _____ strategy is based on determining the highest price that can be offered to the supply manager that will still be lower than the price offered by competitors.

Accepted Answer

A) penetration pricing model 
B) market-share model 
C) cash discount 
D) revenue pricing model 
E) competition pricing model 
A) penetration pricing model 
B) market-share model 
C) cash discount 
D) revenue pricing model 
E) competition pricing model

Question 20

Most large firms base purchase decisions and evaluate suppliers on only the cost elements of unit price, transportation, and tooling.

Accepted Answer

A) True 
 B)False

In should-cost modeling, _____ include those components the company has direct control or influence over.

A seller's cost structure affects price because, in the long run, the seller must price at a level that covers all variable costs of production, contributes to some portion of fixed costs, and contributes to some level of profit.

At the highest levels of the organization, top management seldom uses break-even analysis as a strategic planning tool.

In general, low-value generics in which a competitive market with many potential suppliers exists should emphasize total delivered price.

If total costs are less than target costs, the design must change or costs must be reduced.

Some sellers rely on a detailed analysis of internal cost structures to establish price, whereas others simply price at a level comparable to the competition.

Examples of monopolies in the United States include the steel, automobile, and appliance industries.

In TCO for capital equipment, _____ are all costs associated with operating the equipment through its life.

In the _____, pricing is based on the fact that long-run profitability depends on the market share obtained by the supplier.

In should-cost modeling, _____ refers to the integrity and transparency of the cost model created.

The price paid for purchased products and services has no direct impact on the end customer's perception of value provided by the organization.

_____ indicates whether a seller can lower its cost as a result of the repetitive production of an item.

Target pricing is an innovative approach used in the final stages of the new-product development cycle to establish a contract price between a buyer and a seller.

Which of the following is not one of the categories of products in the strategic cost management matrix?

Under penetration pricing, using final price as a basis, the product is disaggregated into major subsystems, each of which has its own target cost.

The value of money spent any time in the future does not depend on the organization's cost of capital.

In the _____, suppliers are typically concerned about capacity utilization, covering fixed cost, and retaining skilled labor during market slowdowns, when they are willing to reduce their prices until market conditions change.

A major benefit of multiple sourcing is a lower price that results from the higher volumes offered to a supplier.

The _____ strategy is based on determining the highest price that can be offered to the supply manager that will still be lower than the price offered by competitors.

Most large firms base purchase decisions and evaluate suppliers on only the cost elements of unit price, transportation, and tooling.

Introduction to Purchasing and Supply Chain Management

The Purchasing Process

Purchasing Policies and Procedures

Supply Management Integration for Competitive Advantage

Purchasing and Supply Management Organization

Supply Management and Commodity Strategy Development

Supplier Evaluation and Selection

Supplier Quality Management

Supplier Management and Development: Creating a World-Class Supply Base

Worldwide Sourcing

Purchasing and Supply Chain Analysis: Tools and Techniques

Negotiation and Conflict Management

Contract Management

Purchasing Law and Ethics

Lean Supply Chain Management

Purchasing Services

Supply Chain Information Systems and Electronic Sourcing

Performance Measurement and Evaluation

Purchasing and Supply Strategy Trends

Filters

Exam 11: Strategic Cost Management

In should-cost modeling, _____ include those components the company has direct control or influence over.

A seller's cost structure affects price because, in the long run, the seller must price at a level that covers all variable costs of production, contributes to some portion of fixed costs, and contributes to some level of profit.

At the highest levels of the organization, top management seldom uses break-even analysis as a strategic planning tool.

In general, low-value generics in which a competitive market with many potential suppliers exists should emphasize total delivered price.

If total costs are less than target costs, the design must change or costs must be reduced.

Some sellers rely on a detailed analysis of internal cost structures to establish price, whereas others simply price at a level comparable to the competition.

Examples of monopolies in the United States include the steel, automobile, and appliance industries.

In TCO for capital equipment, _____ are all costs associated with operating the equipment through its life.

In the _____, pricing is based on the fact that long-run profitability depends on the market share obtained by the supplier.

In should-cost modeling, _____ refers to the integrity and transparency of the cost model created.

The price paid for purchased products and services has no direct impact on the end customer's perception of value provided by the organization.

_____ indicates whether a seller can lower its cost as a result of the repetitive production of an item.

Target pricing is an innovative approach used in the final stages of the new-product development cycle to establish a contract price between a buyer and a seller.

Which of the following is not one of the categories of products in the strategic cost management matrix?

Under penetration pricing, using final price as a basis, the product is disaggregated into major subsystems, each of which has its own target cost.

The value of money spent any time in the future does not depend on the organization's cost of capital.

In the _____, suppliers are typically concerned about capacity utilization, covering fixed cost, and retaining skilled labor during market slowdowns, when they are willing to reduce their prices until market conditions change.

A major benefit of multiple sourcing is a lower price that results from the higher volumes offered to a supplier.

The _____ strategy is based on determining the highest price that can be offered to the supply manager that will still be lower than the price offered by competitors.

Most large firms base purchase decisions and evaluate suppliers on only the cost elements of unit price, transportation, and tooling.

Introduction to Purchasing and Supply Chain Management

The Purchasing Process

Purchasing Policies and Procedures

Supply Management Integration for Competitive Advantage

Purchasing and Supply Management Organization

Supply Management and Commodity Strategy Development

Supplier Evaluation and Selection

Supplier Quality Management

Supplier Management and Development: Creating a World-Class Supply Base

Worldwide Sourcing

Purchasing and Supply Chain Analysis: Tools and Techniques

Negotiation and Conflict Management

Contract Management

Purchasing Law and Ethics

Lean Supply Chain Management

Purchasing Services

Supply Chain Information Systems and Electronic Sourcing

Performance Measurement and Evaluation

Purchasing and Supply Strategy Trends

Filters