Purchasers Should Set Minimum Acceptable Performance Requirements for a Supplier

question 22

True/False

Purchasers should set minimum acceptable performance requirements for a supplier to meet before they become part of the supply base.

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Definitions:

Variable Selling Expenses

Expenditures that change in direct correlation with the amount of sales, like commission fees and delivery costs.

Fixed Selling Expenses

Costs related to selling that do not change with the level of sales, such as salaries of sales staff and rent for sales space.

High-Low Method

A technique in cost accounting used to estimate fixed and variable costs based on the highest and lowest levels of activity.

Utilities Cost

The expenses incurred for essential services such as electricity, water, and gas used by a business.