Exam 11: Strategic Cost Management

With the increased amount of outsourcing occurring in every global company today, the majority of the cost of goods sold is driven by suppliers, which are outside the four walls of an organization.

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

As a product reaches its end of life, supply management cannot ignore the potential value of environmental initiatives to remanufacture, recycle, or refurbish products that are becoming obsolete.

_____ 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.

All of the following are opportunities for supplier cost reductions except _____.

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

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

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

Under traditional pricing approaches, product cost + profit = selling price.

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

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

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

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

_____ refers to the process of comparing supplier prices against external price benchmarks, without direct knowledge of the supplier's costs.

In the _____, prices are set to achieve a high profit on each unit by selling to supply managers who are willing to pay a higher price because of a lack of supply management sophistication or who are willing to pay for products or services of perceived higher value.

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

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

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

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

How well suppliers purchase their goods and services has no direct impact on purchase price levels.