MGSC-487 Final Exam Questions With Correct Answers

MGSC-487 Final Exam Questions With
Correct Answers


Fair Price - CORRECT ANSWER✔✔-the lowest price that assures
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continuous supply. Fair price to one seller may be higher than a fair
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price to another for an equal item
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Fair & Just Price - CORRECT ANSWER✔✔-Accuracy in making the
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judgment depends on: past experience, knowledge of production
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processes, costs of production processes, logistics costs.
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Continuous Supply - CORRECT ANSWER✔✔-Occurs over the long-run
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only if the supplier is making a reasonable profit.
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Meaning of Cost - CORRECT ANSWER✔✔-an amount that has to be paid
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or spent to buy or obtain something
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Approaches for Establishing Price - CORRECT ANSWER✔✔-Cost
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Approach, Market Approach | |

,Cost Approach - CORRECT ANSWER✔✔-Price is a certain amount over
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direct costs and allows contribution to cover indirect costs and some
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profit. Costs classified as: variable, semi-variable, fixed.
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Market Approach - CORRECT ANSWER✔✔-Prices are set in the
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marketplace and are expected to follow a supply and demand model:
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Supply High, Cost Low. Supply Low, Cost High. Options are to live with it
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or find a way around it:
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• Select suppliers who have other incentives.
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• Substitute "like" materials
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• Outsource (or insource)
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• Establish long-term contracts
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Government Influence on Pricing - CORRECT ANSWER✔✔-Production
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and import quotas, Regulating buyer and seller behavior, Set prices for
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government run organizations. | |




Contract Terminology - CORRECT ANSWER✔✔-- Firm Fixed Price (FFP)
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- Cost Plus Fixed Fee (CPFF)
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- Cost No Fee (CNF)
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- Cost Plus Incentive Fee (CPIF)
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, Difference Between Price and Cost - CORRECT ANSWER✔✔-Cost is the
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expense that a business incurs in bringing a product or service to
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market. Price is the amount a customer pays for that product or service.
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The difference between the price that is paid and the cost that is
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incurred is the profit the business makes when it sells the item.
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Internal Cost Management - CORRECT ANSWER✔✔-Process
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improvement, Supply chain efficiencies | | |




External Cost Management - CORRECT ANSWER✔✔-Negotiation,
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Strategic Cost Management | |




Tools for Strategic Cost Management - CORRECT ANSWER✔✔-ABC
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Analysis (Pareto Analysis), Portfolio Analysis (Quadrant Analysis)
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ABC Analysis (Pareto Analysis) - CORRECT ANSWER✔✔-Dividing Total
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Spend into broad categories. "A" = High $, "B" = Medium $, "C" = Low $.
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Portfolio Analysis (Quadrant Analysis) - CORRECT ANSWER✔✔-Category
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management planning tool
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Total Cost of Ownership Model - CORRECT ANSWER✔✔-- Admin
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- Follow-up
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- Expediting
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