Price is the most visible cost of any purchase. List the seven types of non-price life-cycle costs. How can an understanding of these costs enable a business to charge a higher price than the competition?
What will be an ideal response?
The seven types of non-price life cycle costs are:
(1 ) acquisition costs
(2 ) financing costs
(3 ) holding costs
(4 ) installation costs
(5 ) usage costs
(6 ) repair/maintenance costs
(7 ) disposal costs/value
A company will tend to remain focused on price until it begins to understand how customers acquire, finance, use, maintain and dispose or re-sell its product when compared to competing products. As you look deeper into the costs of ownership, you will likely find opportunities for good customer savings and value creation. For example, in a highly price-competitive market, a company can work at lowering the non-price life cycle costs compared to competitors. Thus, a business may be able to charge a higher price and still deliver a greater economic value to customers.
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The major classes of business-to-business customers are ________
A) producers, retailers, and consumers B) resellers and governments C) organizations, producers, and manufacturers D) producers, resellers, and organizations E) consumers and retailers
A company had the following purchases and sales during its first year of operations: PurchasesSalesJanuary:10 units at $1206 unitsFebruary:20 units at $1255 unitsMay:15 units at $1309 unitsSeptember:12 units at $1358 unitsNovember:10 units at $14013 units?On December 31, there were 26 units remaining in ending inventory. Using the periodic FIFO inventory costing method, what is the cost of the ending inventory? (Assume all sales were made on the last day of the month.)
A. $3,270. B. $3,445. C. $3,200. D. $3,405. E. $3,540.
To purchase an item from an internet site, you will be asked to provide a credit card number. Because of ________, a computer hacker who intercepts this number as it is being sent to the seller would likely see £D¥$&0PDJLJL, or something equally as meaningless.
A. the firewall B. malware C. spyware D. encryption E. decoding
Delamont Transport Company (DTC) is evaluating the merits of leasing versus purchasing a truck with a 4-year life that costs $40,000 and falls into the MACRS 3-year class. If the firm borrows and buys the truck, the loan rate would be 10%, and the loan would be amortized over the truck's 4-year life, so the interest expense for taxes would decline over time. The loan payments would be made at the end of each year. The truck will be used for 4 years, at the end of which time it will be sold at an estimated residual value of $10,000. If DTC buys the truck, it would purchase a maintenance contract that costs $1,000 per year, payable at the end of each year. The lease terms, which include maintenance, call for a $10,000 lease payment (4 payments total) at the beginning of each year. DTC's tax
rate is 25%. What is the net advantage to leasing? (Note: Assume MACRS rates for Years 1 to 4 are 0.3333, 0.4445, 0.15, and 0.07.) A. $1,020 B. $1,075 C. $1,134 D. $1,197 E. $1,257