Introduction to Procurement Quiz 5

Topics: Cost, Costs, Cost accounting Pages: 2 (277 words) Published: February 20, 2014
1. Building a TCO model is an easy task. True False

2. In many cases, the price charged by a seller may have little or no relationship to actual costs. True False

3. 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. True False

4. When demand exceeds supply, a buyer’s market exists, and prices generally decrease. True False

5. The major benefits from cost-reduction efforts occur when purchasing is involved late in the newproduct/service development cycle. True False

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

© Purchasing Management Association of Canada

Introduction to Procurement
7. If learning occurs at a supplier during the performance of a purchase contract and the buyer does not take that into account, then the supplier will not reap the financial benefits that result from learning. True False

8. Learning-curve analysis is a key reason why many buyers consolidate purchase volumes with fewer suppliers. True False

9. The learning curve requires the accurate collection of cost and labor data, particularly during the latter stages of production. True False

10. When using quantity discount analysis, the key calculation is the incremental cost of each additional unit at different quantity levels. True False

11. In a pull system, an upstream work center or operation will create output regardless whether a downstream center directly requests that output. True False

12. Anything less than perfect quality leads to waste. True False

13. All cost accounting systems are capable of identifying and assigning the true costs related to...
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