Chap011 - Chapter 11 - Cost Management C HAPTER 11 Cost...

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Unformatted text preview: Chapter 11 - Cost Management C HAPTER 11 Cost Management Topics Covered Strategic Cost Management What is Strategic Cost Management Sources of Competitive Advantage Frameworks for Cost Management Cost Management Tools and Techniques Total Cost of Ownership Target Pricing Value Engineering/Value Analysis The Learning Curve or Manufacturing Progress Function Activity-Based Costing Negotiation Negotiation Strategy and Practice Framework for Planning and Preparing for Negotiation Incorporating Cost Data into a Negotiation Plan Conclusion Questions for Review and Discussion References Cases 111 Deere Cost Management 112 McMichael Inc. 11-3 City of Granston 11-1 Chapter 11 - Cost Management QUIZ RESPONSES B 1. Target pricing: a. starts with the suppliers price, and works to determine the selling price of the buying organizations end product or service. b. starts with the selling price of an organizations end product minus the operating profit to establish the target cost. c. starts with the selling price of an organizations end product minus actual manufacturing, overhead, and materials costs to determine operating profit. d. starts with the suppliers price, and works to determine the suppliers true cost structure. e. starts with the buyers lowest reasonable price target, and works to a negotiated price agreed on by the buyer and the supplier. C 2. Activity based costing attempts to: a. correct the distortions built into product costing by the way that direct costs are allocated. b. correct the distortions built into product costing by the way that the learning curve is applied to direct labor costs. c. turn indirect costs into direct costs by tracking the cost drivers behind indirect costs. d. turn direct costs into indirect costs by tracking the cost drivers behind direct costs. e. introduce a new way to allocate direct costs that more accurately captures labor and material usage. Chapter 11 - Cost Management A 3. An externally focused process of analyzing costs in terms of the overall value chain is called: a. strategic cost management. b. supply chain management. c. total cost management. d. profit leverage effect. e. activity based costing. E 4. Target pricing may result in companywide cost reductions in: i. design to cost. ii. manufacture to cost. iii. purchase to cost. iv. a and b. v. a, b, and c. D 5. Sources of sustainable competitive advantage include: a. product differentiation (where customers have low price sensitivity), b. low cost (where customers have high price sensitivity), c. a combination of product differentiation and cost-leadership. d. a, b and c i. none of the above Chapter 11 - Cost Management E 6. When developing a negotiation strategy, the negotiator should assess the positions of strength of both (all) parties to: a. decide if negotiation makes sense....
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This note was uploaded on 10/28/2011 for the course P 320 taught by Professor Lee during the Spring '11 term at Columbus State University.

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Chap011 - Chapter 11 - Cost Management C HAPTER 11 Cost...

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