Question

What are the six categories of cost?

Historical prices looks at which of the following

	a.	How have conditions changed?
	b.	Were there one-time engineering, setup, or tooling charges in the original price?
	c.	What should be the effect of inflation or deflation on the price?
	d.	Will the new procurement create a situation in which the supplier should enjoy the benefits of learning?
	e.	All of the above.

Cost analysis is defined as a review and an evaluation of actual or anticipated costs.

True

False

What are the three primary sources of cost data?

Direct costs generally serve as the basis on which sellers allocate their overhead costs. A supply manager would consider which of the following as direct costs?

Answer 1

What are the six categories of cost?

Answer: As described by David N. Burt, Donald W. Dobler and Stephen L. Starling in their book "World Class Supply Management: The Key to Supply Chain Management", six categories of cost are:

1. Variable Manufacturing costs: These costs vary directly and proportionally with the production quantity of a particular product

2. Fixed Manufacturing costs: These costs do not vary with volume but change over time

3. Semi-Variable or Mixed Costs: These costs are neither completely fixed nor completely variable, but somewhere between these extremes.

4. Total Production costs: These costs are sum of variable, fixed and semi-variable costs

5. Direct costs: These costs are traceable to a specific a specific production requirement.

6. Indirect costs (Overhead): These costs are associated with two or more operating activities jointly but are not traced to each of them individually.

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