L4M2 Recap 1

Which of these are variable costs?

1. staff overtime

2. premises costs

3. insurance costs

4. material costs

• 1 and 2 only

• 1 and 4 only

• 2 and 3 only

• 2 and 4 only

A garment manufacturer supplies global retailers with t-shirts and linen trousers. Because of currency fluctuations the manufacturer is aware that they must control their direct costs in order to ensure profits. Which of the following is a direct cost for the garment manufacturer?

• facilities rent

• cotton fabric

• utilities cost

• office staff payroll

A company department is writing a business case to justify the purchase of an expensive piece of capital equipment. Which of the following should be included in the business case?

1. terms and conditions of contract

2. tender evaluation criteria

3. degree of added value

4. financial plan

• 1 and 2 only

• 2 and 3 only

• 3 and 4 only

• 1 and 4 only

Which of the following is typically found in the justification of a business case?

• invoices and payment

• charges and fines

• costs and benefits

• delivery and storage

Which of the following activities would apply to straight re-buy procurement?

1. Reviewing existing specifications and arrangements

2. Engaging in extensive purchasing research

3. Engaging in proactive value engineering

4. Optimizing inventory replenishment methods

• 1 and 4 only

• 2 and 3 only

• 1 and 3 only

• 2 and 4 only

Which of the following would be an indirect cost of motor vehicle manufacture?

• Steel components

• Manufacturing employees' wages

• Machine tooling

• Directors' salary

A manufacturing organization has initiated a project focusing on costs, with a view to making significant saving. A procurement manager is leading the project. The initial data sources have focused on the cost of raw materials. Which of the following describes this cost?

• indirect, variable cost

• indirect. fixed costs

• direct, fixed costs

• direct, variable costs

Which of the following types of purchases may require a re-negotiation of the specification?

• Straight re-buy

• Modified re-buy

• New purchase

• Capital purchase

The first step in developing a business case, according to the procurement cycle is…

• identify the need

• contact the stakeholders

• source the market

• appraise suppliers

A factory procurement manager is sourcing a new supplier for a cleaning contract because they need to introduce high level cleaning using specialist equipment. Is this a straight re-buy?

• Yes. as the services are already sourced

• No, because some of the requirement has changed

• Yes. as there is an existing specification

• No. because a straight re-buy does not apply to services