Question 1

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

Accepted Answer

A)   establish a policy of firm bidding.
B)   allow all bidders to change their bids prior to the bid opening.
C)   allow for negotiation after all bids are received.
D)   give prospective suppliers target cost.
E)   none of the above because competitive bidding is not fair.F) A) and D)
G) C) and D)

Question 2

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:

Accepted Answer

A)   direct costs.
B)   variable costs.
C)   semivariable costs.
D)   indirect costs.
E)   fixed costs.F) A) and B)
G) C) and E)

Question 3

If the delivery date is some months or years away and if there is substantial chance of price escalation, a supplier may feel that there is far too much risk of loss to agree to sell under a:

Accepted Answer

A)   firm-fixed-price plus incentive fee (FFPIF) .
B)   firm-fixed-price (FFP) .
C)   cost-no-fee (CNF) .
D)   cost-plus-fixed-fee (CPFF) .
E)   cost-plus-incentive-fee (CPIF) .F) A) and B)
G) A) and D)

Question 4

A prime function of an organized commodity exchange is to furnish an established marketplace where:

Accepted Answer

A)   commodity prices can be controlled.
B)   sellers of the same commodity can come together to set prices.
C)   products that are difficult to grade can be traded.
D)   there are only a limited number of buyers and sellers.
E)   the forces of supply and demand operate freely.F) D) and E)
G) A) and E)

Question 5

The purchasing manager indexes (PMIs) are leading economic indicators derived from monthly surveys of purchasing managers about forecasted company conditions.

Accepted Answer

A) True 
 B)False

Question 6

The lowest bid may not receive the order if:

Accepted Answer

A)   the buyer discovers the lowest bidder is unreliable.
B)   the lowest bid is higher than the buyer believes justifiable.
C)   there is reason to believe the bidders colluded.
D)   the lowest bid is higher than the buyer believes justifiable and there is reason to believe the bidders colluded.
E)   the buyer discovers the lowest bidder is unreliable, the lowest bid is higher than the buyer believes justifiable and there is reason to believe the bidders colluded.F) A) and E)
G) A) and B)

Question 7

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.

Accepted Answer

A) True 
 B)False

Question 8

If identical bids are received, the buyer might choose to:

Accepted Answer

A)   reject all bids.
B)   initiate an investigation.
C)   negotiate with one or more suppliers.
D)   reject all bids and initiate an investigation.
E)   reject all bids and negotiate with one or more suppliers.F) A) and B)
G) C) and D)

Question 9

Accepting a price discount for ordering larger quantities leads to lower levels of anticipation inventory.

Accepted Answer

A) True 
 B)False

Question 10

Prices may not be directly related to costs in the market approach.

Accepted Answer

A) True 
 B)False

Question 11

An escalator clause provides for an increase, but not a decrease, in price if costs change.

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

Hedging is a way to:

Accepted Answer

A)   ensure lowest price.
B)   try to minimize price and currency exchange risks.
C)   minimize collusive bidding.
D)   set trade discounts.
E)   evaluate quantity discounts.F) A) and D)
G) C) and D)

Question 14

An exception to firm bidding allows the buyer and bidders the flexibility to clarify and define specifications and prices after the initial bids are received, and then bidders submit best-and-final-offers (BAFOs).

Accepted Answer

A) True 
 B)False

Question 15

Items for which prices are comparatively low and the cost of price reduction efforts may exceed any price savings realized are:

Accepted Answer

A)   parts, components, and packaging.
B)   raw materials.
C)   maintenance, repair, and operating supplies.
D)   services.
E)   capital assets.F) A) and B)
G) A) and E) C

Question 16

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:

Accepted Answer

A)   a fair price.
B)   a market price.
C)   a cost-based price.
D)   a buyer's market price.
E)   a seller's market price.F) A) and B)
G) B) and E) A

Question 17

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?

Accepted Answer

A)   24 percent.
B)   30 percent.
C)   36 percent.
D)   45 percent.
E)   54 percent.F) A) and D)
G) A) and B)

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

The process for bidding in the public sector is generally similar to the private sector, although there are a few important differences.

Accepted Answer

A) True 
 B)False  True

Question 20

When using competitive bidding to determine prices, the purchaser should ensure that the bidders are:

Accepted Answer

A)   qualified to make the item or service in accordance with the buyer's specifications and able deliver it by the desired date.
B)   sufficiently reliable.
C)   numerous enough to ensure a truly competitive price.
D)   qualified to make the item or service in accordance with the buyer's specifications, able deliver it by the desired date and sufficiently reliable.
E)   qualified to make the item or service in accordance with the buyer's specifications, able deliver it by the desired date, sufficiently reliable and numerous enough to ensure a truly competitive price.F) A) and B)
G) B) and E)

Exam 10: Price

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

Correct AnswerverifiedShow Answer

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:

Correct AnswerverifiedShow Answer

If the delivery date is some months or years away and if there is substantial chance of price escalation, a supplier may feel that there is far too much risk of loss to agree to sell under a:

Correct AnswerverifiedShow Answer

A prime function of an organized commodity exchange is to furnish an established marketplace where:

Correct AnswerverifiedShow Answer

The purchasing manager indexes (PMIs) are leading economic indicators derived from monthly surveys of purchasing managers about forecasted company conditions.

Correct AnswerverifiedShow Answer

The lowest bid may not receive the order if:

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

If identical bids are received, the buyer might choose to:

Correct AnswerverifiedShow Answer

Accepting a price discount for ordering larger quantities leads to lower levels of anticipation inventory.

Correct AnswerverifiedShow Answer

Prices may not be directly related to costs in the market approach.

Correct AnswerverifiedShow Answer

An escalator clause provides for an increase, but not a decrease, in price if costs change.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Hedging is a way to:

Correct AnswerverifiedShow Answer

An exception to firm bidding allows the buyer and bidders the flexibility to clarify and define specifications and prices after the initial bids are received, and then bidders submit best-and-final-offers (BAFOs).

Correct AnswerverifiedShow Answer

Items for which prices are comparatively low and the cost of price reduction efforts may exceed any price savings realized are:

Correct AnswerverifiedC

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:

Correct AnswerverifiedA

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?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The process for bidding in the public sector is generally similar to the private sector, although there are a few important differences.

Correct AnswerverifiedTrue

When using competitive bidding to determine prices, the purchaser should ensure that the bidders are:

Correct AnswerverifiedShow Answer

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C

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A

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True

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