SCM 371 Ch10 hw

This bond guarantees work will be done according to specifications, in the time specified, and if another supplier does rework or completes the order, purchasing is indemnified for these extra costs. -bid bond. -performance bond. -lien bond. -payment bond. -surety bond.

performance bond

Governments typically play no role in establishing prices or regulating how buyers and sellers are allowed to behave in agreeing on prices.

FALSE

Indirect costs can be specifically and accurately assigned to a given unit of production or a specific identifiable task performed by a service provider.

FALSE

A payment bond protects the buyer against liens that might be granted to suppliers of material and labor to the bidder, in the event the bidder does not make proper payment to its suppliers.

TRUE

Identical pricing for bids can be discouraged through: -allowing bids on parts of large contracts if bidders feel the total contract is too large. -using firm bidding without revision. -increasing the number of bidders. -allowing bids on parts of large contracts if bidders feel the total contract is too large and using firm bidding without revision. -allowing bids on parts of large contracts if bidders feel the total contract is too large, using firm bidding without revision and increasing the number of bidders.

allowing bids on parts of large contracts if bidders feel the total contract is too large and using firm bidding without revision.

If the buyer wants to motivate the seller to manage total costs, the best type of contract is: -cost-plus-fixed-fee (CPFF). -cost-no-fee (CNF). -firm-fixed-price (FFP). -firm-fixed-price plus incentive fee (FFPIF). -cost-plus-incentive-fee (CPIF).

cost-plus-incentive-fee (CPIF).

Identical prices received from various sources should: -be expected when the specification is highly customized. -draw attention if the specification is complex or detailed. -always make the buyer suspicious of collusion. -only draw attention if the buyer is dissatisfied with the price quoted. -result in the buyer taking legal action against all bidders.

draw attention if the specification is complex or detailed.

Public purchasers are required to award contracts to the lowest "responsible" and "responsive" bidder. This means the bidder is: -fully capable and willing to perform the work and submits a bid that conforms to the invitation for bid. -a business in the local community and submits the bid by the deadline. -a respected business in the local community and responds within 48 hours of all requests. -fully capable and willing to perform the work and responds to the bid in a timely manner. -willing to perform the work using some minority-owned sub-contractors and submits the bid by the deadline.

fully capable and willing to perform the work and submits a bid that conforms to the invitation for bid.

The market approach to pricing: -means prices are set to cover direct costs, contribute to indirect costs, and attain a profit. -is the only defensible pricing mechanism for ethical companies to use. -implies that prices are set based on what the market will bear. -means that prices are adjusted regularly to ensure that the seller recoups all of its marketing costs. -implies that market analysis is the only technique that should be employed to negotiate prices.

implies that prices are set based on what the market will bear.

Costs incurred in the operation of a production plant or process, but normally cannot be related directly to any given unit of production or service provided, are called: -direct costs. -variable costs. -semivariable costs. -indirect costs. -fixed costs.

indirect costs.

Forward buying: -offsets transactions to protect against price and exchange risks. -involves purchasing for known or estimated future requirements. involves no risk for the buying organization. -is the same as speculation. -seeks to take advantage of price movements.

involves purchasing for known or estimated future requirements.

A fair price: -is the lowest price that ensures a continuous supply of the proper quality where and when needed and at which the supplier makes a reasonable profit. -is based on market conditions, and cost structure has no bearing on the determination of a fair price. -is based on the cost to produce an item or service without consideration for the supplier's profit margin. -is an amount arrived at through negotiations where the seller's price is a starting point. -is when all sellers of equal goods or services receive the same per unit price.

is the lowest price that ensures a continuous supply of the proper quality where and when needed and at which the supplier makes a reasonable profit.

The Sherman Antitrust Act states that suppliers: -must adjust price so that profit does not exceed a set percentage of direct costs. -use standard grade descriptions in advertising products. -not talk with competitors about price. -meet competition by adjusting price. -must sell the same item, in the same quantity, to all customers at the same price.

not talk with competitors about price.

Items for which prices may be fixed or variable, by the job or by the hour, day, or week are called: -raw and semi processed materials. -parts, components, and packaging. -maintenance, repair, and operating supplies. -capital assets. -services.

services.

Most direct costs are: -overhead costs. -general and administrative costs. -fixed costs. -variable costs. -semivariable costs.

variable costs.