Question 1

Portfolio analysis is:

Accepted Answer

A)   a method of multiple sourcing.
B)   a method of identifying substitute materials.
C)   the categorization of spend map based on the risks to acquire in the marketplace and value.
D)   a method of multiple sourcing and the categorization of spend map based on the risks to acquire in the marketplace and value.
E)   a method of multiple sourcing, a method of identifying substitute materials and the categorization of spend map based on the risks to acquire in the marketplace and value.

Question 2

After identifying and implementing supply cost savings, the supply manager should:

Accepted Answer

A)   validate the savings with finance/accounting.
B)   evaluate potential implications for changes to the budget.
C)   notify the budget holder so he or she can use the savings for other expenses or projects.
D)   validate the savings with finance/accounting and evaluate potential implications for changes to the budget.
E)   validate the savings with finance/accounting, evaluate potential implications for changes to the budget and notify the budget holder so he or she can use the savings for other expenses or projects.

Question 3

Although associated with a number of factors, the learning curve normally is most closely identified with the analysis of direct labor costs.

Accepted Answer

A) True 
 B)False

Question 4

FinTech firms assist manufacturers in the development and implementation of process technology innovation.

Accepted Answer

A) True 
 B)False

Question 5

Cost management for services:

Accepted Answer

A)   is confined to internal demand analysis and consumption management.
B)   is confined to supplier cost structure analysis.
C)   includes demand management and supplier cost structure analysis.
D)   focuses primarily on better design of the service.
E)   is only possible when the service is highly tangible.

Question 6

When estimating the cost structure of a manufacturing supplier:

Accepted Answer

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

Question 7

Best practice in managing supply cost savings includes a formal process to validate the savings with finance/accounting and evaluate potential changes to the budget.

Accepted Answer

A) True 
 B)False

Question 8

In portfolio analysis, bottleneck items are characterized by high risk and high value.

Accepted Answer

A) True 
 B)False

Question 9

Qualifying sources is an example of a post-transaction cost phase in the total cost of ownership model.

Accepted Answer

A) True 
 B)False  False

Question 10

Target costing may result in company-wide cost reductions in design to cost, manufacture to cost, and purchase to cost.

Accepted Answer

A) True 
 B)False

Question 11

In value engineering and value analysis, value can be expressed as: Price ÷ Cost.

Accepted Answer

A) True 
 B)False

Question 12

In portfolio analysis, cost analysis can be used in the acquisition of strategic goods or services to identify opportunities to:

Accepted Answer

A)   divide the spend for the item or service among multiple suppliers.
B)   avoid, eliminate or reduce costs in supplier switching costs.
C)   avoid, eliminate or reduce costs in buyer and supplier cost structures.
D)   avoid, eliminate or reduce costs in the supplier's cost structure.
E)   avoid, eliminate or reduce costs in the buyer's cost structure.

Question 13

Cost management tools and techniques that may provide data for negotiations with internal organizational stakeholders and/or externally with suppliers include:

Accepted Answer

A)   activity-based costing.
B)   the learning curve.
C)   total cost of ownership.
D)   activity-based costing and total cost of ownership.
E)   activity-based costing, the learning curve and total cost of ownership.

Question 14

Value engineering (VE) and value analysis (VA) use the same methods, but VA is performed in the design stage and VE is performed in the redesign stage.

Accepted Answer

A) True 
 B)False

Question 15

In portfolio analysis, strategic goods and service are both more valuable to the buying organization and riskier to acquire.

Accepted Answer

A) True 
 B)False  True

Question 16

When cost analysis is applied to a supplier's price, the buyer:

Accepted Answer

A)   identifies a cost reduction target with no insight into specific cost elements.
B)   relies on supplier information about areas where it can cut costs.
C)   recognizes that little cost data is available for most cost elements.
D)   identifies and analyzes each cost element for cost reduction opportunities.
E)   cannot expect any assistance from the supplier. D

Question 17

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 18

Purchasers can use activity-based costing to:

Accepted Answer

A)   eliminate nonvalue-adding activities.
B)   reduce activity occurrences.
C)   reduce the cost driver rate.
D)   eliminate nonvalue-adding activities and reduce the cost driver rate.
E)   eliminate nonvalue-adding activities, reduce activity occurrences and reduce the cost driver rate.

Question 19

Life cycle costing can be used to justify the acquisition of expensive equipment on the basis of lower operating costs over the life of the asset.

Accepted Answer

A) True 
 B)False

Question 20

Purchases categorized as leverage items in portfolio analysis have the following characteristic(s) :

Accepted Answer

A)   standard specification or commodity-type items.
B)   switching suppliers is difficult.
C)   supplier technology is important.
D)   standard specification or commodity-type items and supplier technology is important.
E)   standard specification or commodity-type items, switching suppliers is difficult and supplier technology is important.

Exam 11: Cost Management

Portfolio analysis is:

Correct AnswerverifiedShow Answer

After identifying and implementing supply cost savings, the supply manager should:

Correct AnswerverifiedShow Answer

Although associated with a number of factors, the learning curve normally is most closely identified with the analysis of direct labor costs.

Correct AnswerverifiedShow Answer

FinTech firms assist manufacturers in the development and implementation of process technology innovation.

Correct AnswerverifiedShow Answer

Cost management for services:

Correct AnswerverifiedShow Answer

When estimating the cost structure of a manufacturing supplier:

Correct AnswerverifiedShow Answer

Best practice in managing supply cost savings includes a formal process to validate the savings with finance/accounting and evaluate potential changes to the budget.

Correct AnswerverifiedShow Answer

In portfolio analysis, bottleneck items are characterized by high risk and high value.

Correct AnswerverifiedShow Answer

Qualifying sources is an example of a post-transaction cost phase in the total cost of ownership model.

Correct AnswerverifiedFalse

Target costing may result in company-wide cost reductions in design to cost, manufacture to cost, and purchase to cost.

Correct AnswerverifiedShow Answer

In value engineering and value analysis, value can be expressed as: Price ÷ Cost.

Correct AnswerverifiedShow Answer

In portfolio analysis, cost analysis can be used in the acquisition of strategic goods or services to identify opportunities to:

Correct AnswerverifiedShow Answer

Cost management tools and techniques that may provide data for negotiations with internal organizational stakeholders and/or externally with suppliers include:

Correct AnswerverifiedShow Answer

Value engineering (VE) and value analysis (VA) use the same methods, but VA is performed in the design stage and VE is performed in the redesign stage.

Correct AnswerverifiedShow Answer

In portfolio analysis, strategic goods and service are both more valuable to the buying organization and riskier to acquire.

Correct AnswerverifiedTrue

When cost analysis is applied to a supplier's price, the buyer:

Correct AnswerverifiedD

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

Correct AnswerverifiedShow Answer

Purchasers can use activity-based costing to:

Correct AnswerverifiedShow Answer

Life cycle costing can be used to justify the acquisition of expensive equipment on the basis of lower operating costs over the life of the asset.

Correct AnswerverifiedShow Answer

Purchases categorized as leverage items in portfolio analysis have the following characteristic(s) :

Correct AnswerverifiedShow Answer

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False

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D

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