Question 1

Activity based costing attempts to:

Accepted Answer

A)   correct the distortions built into product costing by the way that direct costs are allocated.
B)   correct the distortions built into product costing by the way that the learning curve is applied to direct labor costs.
C)   turn indirect costs into direct costs by tracking the cost drivers behind indirect costs.
D)   turn direct costs into indirect costs by tracking the cost drivers behind direct costs.
E)   introduce a new way to allocate direct costs that more accurately captures labor and material usage.F) A) and E)
G) A) and B)

Question 2

Sources of sustainable competitive advantage include:

Accepted Answer

A)   product differentiation where customers have low price sensitivity) ,
B)   low cost where customers have high price sensitivity) ,
C)   a combination of product differentiation and cost-leadership.
D)   a, b and c i. none of the aboveE) B) and D)
F) B) and C)

Question 3

A unique cost model is one that applies to a variety of common supply situations.

Accepted Answer

A) True 
 B)False

Question 4

When estimating the costs of a manufacturing supplier:

Accepted Answer

A)   prices of raw materials are not commonly accessible.
B)   equipment depreciation is typically the largest single cost element in overhead.
C)   material costs are difficult to estimate.
D)   direct labor costs are the easiest costs to estimate.
E)   labor rates are typically uniform across different plant locations.F) B) and C)
G) A) and B)

Question 5

Activity based costing primarily is an accounting process that has little practical value for buyers.

Accepted Answer

A) True 
 B)False

Question 6

Value engineering VE) and value analysis VA) refer to the same process, but VE is applied to the design stage, and VA is applied to redesign.

Accepted Answer

A) True 
 B)False  True

Question 7

When developing a negotiation strategy, the negotiator should assess the positions of strength of both all)  parties to:

Accepted Answer

A)   decide if negotiation makes sense.
B)   establish negotiation points.
C)   avoid setting unrealistic expectations.
D)   b and c
E)   a, b, and cF) A) and C)
G) All of the above

Question 8

When cost analysis is applied to a supplier's price, the buyer focuses on identifying an overall cost reduction target with little insight into specific cost elements.

Accepted Answer

A) True 
 B)False

Question 9

In portfolio analysis, the goal when purchasing leverage items is:

Accepted Answer

A)   minimize total cost of ownership.
B)   minimize acquisition time and cost and price per unit..
C)   reduce or eliminate customization.
D)   assure continuous supply at lowest total cost of ownership.
E)   assure quality at expected levels.F) A) and B)
G) A) and D)

Question 10

An externally focused process of analyzing costs in terms of the overall value chain is called:

Accepted Answer

A)   strategic cost management.
B)   supply chain management.
C)   total cost management.
D)   profit leverage effect.
E)   activity based costing.F) B) and C)
G) All of the above A

Question 11

Target pricing may result in companywide cost reductions in:

Accepted Answer

A)   design to cost.
B)   manufacture to cost.
C)   purchase to cost.
D)   a and b.
E)   a, b, and cF) A) and D)
G) C) and D)

Question 12

In portfolio analysis, the goal when purchasing strategic goods or services is to:

Accepted Answer

A)   assure quality at expected levels.
B)   assure continuous supply at lowest cost of ownership.
C)   minimize acquisition time and cost.
D)   minimize acquisition time and cost and price per unit.
E)   reduce or eliminate customization.F) None of the above
G) C) and D)

Question 13

Target pricing:

Accepted Answer

A)   starts with the supplier's price, and works to determine the selling price of the buying organization's end product or service.
B)   starts with the selling price of an organization's end product minus the operating profit to establish the target cost.
C)   starts with the selling price of an organization's end product minus actual manufacturing, overhead, and materials costs to determine operating profit.
D)   starts with the supplier's price, and works to determine the supplier's true cost structure.
E)   starts with the buyer's lowest reasonable price target, and works to a negotiated price agreed on by the buyer and the supplier.F) A) and B)
G) A) and C)

Question 14

In negotiation, a fact is any piece of information on which the buyer believes he or she can negotiate an agreement with the supplier.

Accepted Answer

A) True 
 B)False

Question 15

Besides price determination, there are very few areas in supply management where negotiation is a useful and cost-effective tool.

Accepted Answer

A) True 
 B)False

Question 16

If the goal of negotiation is performance, then the process and tactics used during the negotiation are important because they have great impact on the intention to perform.

Accepted Answer

A) True 
 B)False

Question 17

Value methodology is a systematic approach to analyzing the functions of a product, part, service, or process to satisfy all needed quality and user requirements at optimum total cost of ownership.

Accepted Answer

A) True 
 B)False

Question 18

In planning for negotiation, a factor or item of information over which disagreement is expected is known as an issue.

Accepted Answer

A) True 
 B)False

Question 19

Educating suppliers about the buying organization's operations is an example of a transaction cost in the total cost of ownership model.

Accepted Answer

A) True 
 B)False

Question 20

Although associated with a number of factors, the learning curve normally is most closely identified with the analysis of:

Accepted Answer

A)   tooling costs.
B)   profit rates.
C)   overhead costs.
D)   direct labor costs.
E)   direct material costs.F) B) and C)
G) A) and B) D

Exam 11: Cost Management

Activity based costing attempts to:

Correct AnswerverifiedShow Answer

Sources of sustainable competitive advantage include:

Correct AnswerverifiedShow Answer

A unique cost model is one that applies to a variety of common supply situations.

Correct AnswerverifiedShow Answer

When estimating the costs of a manufacturing supplier:

Correct AnswerverifiedShow Answer

Activity based costing primarily is an accounting process that has little practical value for buyers.

Correct AnswerverifiedShow Answer

Value engineering VE) and value analysis VA) refer to the same process, but VE is applied to the design stage, and VA is applied to redesign.

Correct AnswerverifiedTrue

When developing a negotiation strategy, the negotiator should assess the positions of strength of both all) parties to:

Correct AnswerverifiedShow Answer

When cost analysis is applied to a supplier's price, the buyer focuses on identifying an overall cost reduction target with little insight into specific cost elements.

Correct AnswerverifiedShow Answer

In portfolio analysis, the goal when purchasing leverage items is:

Correct AnswerverifiedShow Answer

An externally focused process of analyzing costs in terms of the overall value chain is called:

Correct AnswerverifiedA

Target pricing may result in companywide cost reductions in:

Correct AnswerverifiedShow Answer

In portfolio analysis, the goal when purchasing strategic goods or services is to:

Correct AnswerverifiedShow Answer

Target pricing:

Correct AnswerverifiedShow Answer

In negotiation, a fact is any piece of information on which the buyer believes he or she can negotiate an agreement with the supplier.

Correct AnswerverifiedShow Answer

Besides price determination, there are very few areas in supply management where negotiation is a useful and cost-effective tool.

Correct AnswerverifiedShow Answer

If the goal of negotiation is performance, then the process and tactics used during the negotiation are important because they have great impact on the intention to perform.

Correct AnswerverifiedShow Answer

Value methodology is a systematic approach to analyzing the functions of a product, part, service, or process to satisfy all needed quality and user requirements at optimum total cost of ownership.

Correct AnswerverifiedShow Answer

In planning for negotiation, a factor or item of information over which disagreement is expected is known as an issue.

Correct AnswerverifiedShow Answer

Educating suppliers about the buying organization's operations is an example of a transaction cost in the total cost of ownership model.

Correct AnswerverifiedShow Answer

Although associated with a number of factors, the learning curve normally is most closely identified with the analysis of:

Correct AnswerverifiedD

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