Ch. 10: Price

The lowest price that ensures a continuous supply of the proper quality where and when needed and allows the supplier to make a reasonable profit, is commonly known as:

a fair price.

The fairest possible means of treating all suppliers alike in a competitive bidding situation is to:

establish a policy of firm bidding.

Buyers typically prefer a:

firm-fixed-price (FFP) contract.

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.

Items for which prices are comparatively stable and likely to be quoted on a list-price-less-discounts basis are called:

standard production items.

Hedging is a way to:

try to minimize price and exchange risks.

A cash discount of 1/15, N/30 (1 percent cash discount if payment is made in 15 days, with the gross amount due in 30 days) is the equivalent of what approximate interest rate?

24

The cost approach to pricing:

means prices are set to cover direct costs, contribute to indirect, and attain a profit.

Costs incurred in the operation of a production plant or process, are called:

indirect costs

The Robinson-Patman Act basically requires that suppliers:

must sell the same item, in the same quantity, to all customers at the same price.