Exam 11: Strategic Cost Management

Which of the following is not one of the important factors to consider when building a TCO model?

Break-even analysis includes both cost and revenue data for an item to identify the point where revenue equals cost, and the expected profit or loss at different production volumes.

In the _____, the supplier analyzes the market to find the combination of price per unit and quantity of sales that maximizes its profit on the assumption that (1) lowering the price will result in more units being sold, and (2) greater volume will spread the indirect cost over more units.

When demand exceeds supply, a buyer's market exists, and prices generally decrease.

Although a quantity discount has a positive effect on the purchase price, a buyer need not be cautious about the net impact on the total cost of an item.

In the framework for strategic cost management, _____ are high-value products or services and can be sourced through traditional bidding approaches that require price analysis using market forces to do the work and identify what is a competitive price.

Which of the following is not an item or product that is an appropriate candidate for a cost-based pricing approach?

Which of the following is not one of the questions that should be asked when analyzing a seller's pricing strategy?

In should-cost modeling, the _____ provides a high level view of the supply chain, and then the supplier's primary cost elements are broken down into material, labor, overhead, transportation freight, inventory cost, maintenance costs, and others.

Which of the following is not one of the common assumptions typically used in break-even analysis?

_____ is the process of analyzing each individual cost element (i.e., material, labor hours and rates, overhead, general and administrative costs, and profit) that together add up to the final price.

The difference between the supplier's price and the target cost becomes the strategic cost-reduction objective.

A/An _____ is defined as the cost of the next best alternative.

With _____, a product's allowable cost is strictly a function of what a market segment is willing to pay less the profit goals for the product.

A cost-based approach to supplier pricing is feasible when the seller contributes high added value to an item through direct or indirect labor and specialized expertise.

_____ is defined as the present value of all costs associated with a product, service, or capital equipment that are incurred over its expected life.

Traditional pricing practices have supported cooperative efforts to make design, product, and process improvements.

Purchasers impact price at the time they set the specifications for the product or service.

A cost-based approach to determining price is clearly appropriate for all purchased items.

In the _____, the desired profit is added to the estimated cost.