Deal of The Day! Hurry Up, Grab the Special Discount - Save 25% - Ends In 00:00:00 Coupon code: SAVE25
Welcome to Pass4Success

- Free Preparation Discussions
Mail Us support@pass4success.com
Location US
Mob_nav_barsMENU

CIPS Exam L4M2 Topic 5 Question 46 Discussion

Actual exam question for CIPS's L4M2 exam
Question #: 46
Topic #: 5
[All L4M2 Questions]

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?

Show Suggested Answer Hide Answer
Suggested Answer: C

In this scenario, the final product has vast range of parts. The second problem is lacking any part can cause disruption to the production process. So GE has 2 things to do: to reduce the part varie-ties, and secure the supply. Part standardisation is the best option here. It can simplify the range of parts or materials used, and simultaneously, it expands the supply base of GE. If a supplier fails to deliver the part, the company always has other options to replace.

Costs are also a concern, but bottleneck in production imposes a serious risk to the organisation. Driving down costs using market competition cannot be a foremost priority.

Increasing production may help to reduce bottleneck. However, it will also increase the inventory of finished products and unnecessary upkeep costs.

LO 3, AC 3.4


by Aliza at Sep 12, 2024, 09:51 PM

Limited Time Offer

25%

Off

Get Premium L4M2 Questions as Interactive Web-Based Practice Test or PDF

Contribute your Thoughts:

Submit Cancel
Stephaine
1 months ago
Indirect costs? Psh, I'll just ask the supplier for their 'best and final' offer. That's all I need to know!
upvoted 0 times
Kristian
24 hours ago
No, because the only information available is for direct costs
upvoted 0 times
...
Maurine
2 days ago
A) Yes, because indirect costs are always variable
upvoted 0 times
...
...
Valentin
1 months ago
D makes the most sense. Knowing the indirect costs gives the buyer more leverage in the negotiations.
upvoted 0 times
Milly
1 months ago
A) Yes, because indirect costs are always variable
upvoted 0 times
...
...
Noel
2 months ago
Haha, C is a classic 'supplier-friendly' answer. Of course they don't want the buyer to know the actual costs!
upvoted 0 times
Luis
1 months ago
Haha, C is a classic 'supplier-friendly' answer. Of course they don't want the buyer to know the actual costs!
upvoted 0 times
...
Artie
2 months ago
A) Yes, because indirect costs are always variable
upvoted 0 times
...
...
Emile
2 months ago
I agree with Claribel, understanding the cost build-up of the goods can help in supplier negotiations, so the statement is true.
upvoted 0 times
...
Stevie
2 months ago
I disagree, I believe the only information available is for direct costs, so the statement is false.
upvoted 0 times
...
Lemuel
2 months ago
B sounds right to me. The information available is usually limited to direct costs, not indirect costs.
upvoted 0 times
...
Devora
2 months ago
I think D is the correct answer. The buyer can review the indirect costs to understand the supplier's cost build-up and negotiate better.
upvoted 0 times
Kayleigh
16 days ago
Exactly, it helps in negotiating better with suppliers.
upvoted 0 times
...
Fannie
1 months ago
That makes sense. It's important for buyers to have that information.
upvoted 0 times
...
Alesia
2 months ago
Yes, because the buyer can understand the cost build-up of the goods
upvoted 0 times
...
Daryl
2 months ago
I think D is the correct answer.
upvoted 0 times
...
...
Claribel
2 months ago
I think the statement is true because indirect costs can impact the overall cost of goods.
upvoted 0 times
...

Save Cancel