QUESTION: 33

Which of the following are typical characteristics of activity-based costing (ABC) method? Select TWO that apply.

ABC provides the information required to take action and realise improvements
Limited understanding of true costs incurred
ABC has tended to over cost products on long runs and under cost those on short runs
Costs are allocated based on volume
Variable and all related overhead expenses are specifically assigned to a business activity

Answer(s): A,E

Explanation:

Activity-based costing is an alternative approach to traditional absorption costing. The characteristics of these two methods are illustrated in the graph below:

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QUESTION: 34

To buying organisation, savings can be achieved from different saving levers or tactics.
Which of the following are means that deliver savings through optimising specifications?

Value engineering
Part substitution
Budget linkages
Compare total cost of ownership
Volume pooling

Answer(s): A,B

Explanation:

If driving greater value and efficiency from your supply base is your end, you should remember that there are many ways to do this without seeking to negotiate lower prices. Below are 7 types of saving levers:

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QUESTION: 35

Which of the following are types of questions that are useful in opening and testing phases of a negotiation? Select the TWO that apply.

Closed
Narrow
Probing
Leading
Open

Answer(s): C,E

Explanation:

In the opening phase, parties should confirm understanding and get the issues on the table. The testing phase is an information gathering stage where the hypothesis and assumption you have made in the planning stage can be tested or confirmed or disproved. Opening questions (those that start with 'what', 'how', 'why') are used at the opening and testing stages to uncover needs and underlying motives, and to allow the buyer to get a feel of what is in store in the negotiation.
Probing questions are also useful to check that the supplier fully understand their offering, as well as your needs, and can also be used to communicate to the supplier that you know this category well. These questions are typically useful at the opening and testing stages.

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QUESTION: 36

It may be more difficult to buy on a credit from supplier who locates in a country with a hyperinflation? Is this assumption true?

No, because supplier's bank will take risks from currency fluctuation
Yes, because the supplier's currency will lose its value overtime
Yes, because buyer has more advantage if they make payment in their own currency
No, because the higher the inflation rate, the stronger the supplier's currency

Answer(s): B

Explanation:

If the inflation rate is running high, then obtaining credit as a buyer is normally more difficult or expensive as money in the future will be worth less than money today.

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QUESTION: 33

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QUESTION: 34

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QUESTION: 35

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QUESTION: 36

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