Buyers should have the ability to analyse the costs of their purchases not only for...

Question

Buyers should have the ability to analyse the costs of their purchases not only for determining their impact to their organisation’s cost but also for the purpose of reducing them during commercial negotiations to contribute to the profitability of their organisation. One way ofanalysing costs is to classify them into direct and indirect costs. Which ONE of the following is an explanation of ‘direct costs’?

Accepted Answer

B. Costs of materials, labour, and other expenses that are directly identified with manufactured units of a product

Answer

A. Costs that are only related to manufacturing firms where raw materials are directly converted into specific product units

Answer

C. Costs that are connected with materials and labour, excluding expenses used directly in manufacturing products

Answer

D. Costs of labour and expenses incurred directly whether or not the production fluctuates owing to demand or downtime

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CIPS Level 4 Diploma in Procurement and Supply L4M5 Question # 60 Topic 7 Discussion

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