Exam 11: Strategic Cost Management

_____ applies the price/cost equation across multiple processes that span two or more organizations across a supply chain.

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.

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

Identification of all costs provides the basis for establishing joint improvement targets.

In a/an _____ market structure, there exist identical products with minimal barriers for new suppliers to enter the market, and price is solely a function of the forces of supply and demand.

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.

Economic conditions seldom determine whether a market is favorable to the seller or to the purchaser.

In the _____, the supplier simply takes its estimate of costs and adds a markup percentage to obtain the desired profit.

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

In TCO for a product, _____ include(s) all costs associated with converting the purchased part/material into the finished product and supporting it through its usable life.

The opportunity cost of taking the supplier's cash discount is almost always higher than the opportunity cost of not taking the cash discount.

In the _____, the supplier establishes a price that will provide a profit margin that is a predetermined percentage of the quoted price, i.e., not a percentage of cost.

Building a TCO model is an easy task.

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.

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

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

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

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.

All of the following are examples of broad total cost of ownership categories except _____.

_____ 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.