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A buyer can use sources of information to review indirect costs associated with the manufacture of goods to support supplier negotiations. Is this statement true?
Suggested Answer: B
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Comprehensive and Detailed Explanation (from CIPS L4M2 -- Cost Management and Analysis)
CIPS teaches that indirect costs (e.g. overheads, admin, factory costs) can be estimated by using:
Supplier financial statements,
Benchmarking,
Industry cost models.
Analysing these supports negotiations by revealing true cost drivers.
Therefore, Option B is correct --- buyers can and should assess indirect costs when evaluating total cost and negotiating.
Relevant L4M2 references:
''Understanding direct and indirect cost elements''
''Cost analysis and should-cost models in business case preparation''
27 comments · newest first
RO
Rosalyn
6 months ago
I agree with Melissa. Indirect costs can influence pricing.
LA
Laura
6 months ago
No way! Only direct costs matter in quotes.
SA
Sanda
6 months ago
Definitely yes! Knowing the cost build-up is crucial.
ME
Melissa
6 months ago
I think it's true. Understanding costs helps in negotiations.
LA
Lavonna
7 months ago
No way, direct costs are the main focus, right?
DA
Daron
7 months ago
Supplier quotes aren't the only info; market research helps too.
DA
Dalene
7 months ago
Wait, are indirect costs always variable? That seems off.
LI
Lindsay
7 months ago
I agree, knowing indirect costs helps in negotiations.
DA
Daniel
7 months ago
Definitely true! Understanding costs is key.
TH
Theola
7 months ago
Gotta love those indirect costs - the hidden gems of the manufacturing world!
ME
Merilyn
8 months ago
Indirect costs? More like "in-direct" costs, am I right? *wink wink*
JO
Joni
8 months ago
A) is just plain wrong. Buyers have access to various sources beyond the supplier's quotation.
LU
Luther
8 months ago
D) is a bit of a stretch. Indirect costs can be both fixed and variable.
BR
Brandon
9 months ago
C) is wrong. Indirect costs are an important part of the overall cost structure.
KA
Katie
9 months ago
B) is the correct answer. Understanding the cost build-up is crucial for effective supplier negotiations.
KE
Kenny
9 months ago
D seems wrong to me because not all indirect costs are variable; I think that could be a trap in the question.
PE
Penney
9 months ago
I feel like A could be misleading; I mean, we definitely have other sources besides just the supplier's quote, right?
EU
Eugene
9 months ago
I'm not too sure, but I remember a practice question that mentioned indirect costs can influence pricing.
JU
Juan
10 months ago
I think the answer might be B, since understanding the cost build-up is crucial for negotiations.
CA
Catalina
10 months ago
This is a tricky one. I'm going to read through the question and answers again carefully before making a decision. I want to make sure I understand the concepts involved.
PA
Pauline
10 months ago
Okay, I've got a strategy here. I'll eliminate the options that don't seem right, then choose between the remaining ones. A and C don't sound correct, so I'm leaning towards B or D.
TA
Tammara
10 months ago
Hmm, I'm not too confident about this one. I'll need to think through the differences between direct and indirect costs to decide which answer makes the most sense.
NA
Natalie
10 months ago
I'm a bit confused here. Are indirect costs the same as variable costs? I'm not sure if option D is correct or not.
AL
Alona
10 months ago
This seems like a straightforward question about indirect costs. I think I'll go with option B - the buyer can use information to understand the cost build-up.
DA
Dalene
4 months ago
Option B is the way to go!
SA
Sabrina
4 months ago
Definitely, understanding cost build-up is crucial.
JI
Jimmie
4 months ago
I agree, option B makes the most sense.