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5 Cards in this Set
- Front
- Back
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What is the difference between cost and price |
Cost is the money laid out by an organisation to acquire the goods or services it requires
Price is what an organisation charges its customers
Therefore cost is an input and price an output |
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Sources of data that a buyer might consult to obtain information about market prices of inputs |
Direct communication with the supplier through rfq or price enquiries Attending trade exhibitions and conferences Online forums The buyers own database of market data Suppliers brochure and catalogues Website Informal networking with colleagues and other buyers |
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Factors that a buyer might expect a supplier to take into account when setting the selling price of their product |
Suppliers cost of production - labour, overheads and materials Amount of profit the supplier wishes to make Demand for the product The extent of competition/market prices State of economy Suppliers relationship with the buyer
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Using examples, explain the difference between direct and indirect costs |
Direct cost can be wholly and directly attributed to a product eg raw materials and labour
Indirect cannot be identified with a specific saleable unit of output eg rent,electricity, heating and maintenance |
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What is total lifecycle costing and 5 costs |
Whole life cost - economic assessment considering all agreed projected significant and relevant cost flows over a period of analysis, expressed in monetary value. The projected costs are those needed to achieve defined levels of performance including reliability, safety and availability |
