Total cost of ownership of a solar panel is $5,000 and it is expected that the panel will make a sav-ing of $1,000 each year. So it would take 5 years for the benefits to repay the investment. Therefore, the firm plans to keep the solar panel for at least 5 years. Is payback period calculation right for making the business decision?

• A.Yes, because it takes everything into account
• B.No, because payback period can be only used to calculate the depreciation of a fixed asset
• C.No, because payback period doesn't take into account price fluctuations
• D.Yes, because payback period shows how long the firm recovers the investment

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Which of the following sources of information are considered as primary data? Select TWO that apply.

• A.The information about specific market sectors from trade associations
• B.Commercial publishers of market reports
• C.The collection of data from surveying customers
• D.RFI
• E.Reports in business magazines

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Product development consists of various stages, including planning and analysis, design develop-ment, pre-production, production and maintenance. At which stages the opportunities for cost re-duction will be the greatest?
1. Planning stage
2. Pre-design stage
3. Detail design stage
4. Production stage
5. Logistics support stage

• A.2 and 3 only
• B.2 and 5 only
• C.1 and 2 only
• D.1 and 4 only

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Which of the following is the best definition of target costing?

• A.The net present cost of the purchase or project and all future revenues flowing from it discounted back to the present time.
• B.The total of all costs in acquiring goods or services from the inception of the demand for them until their safe and satisfactory delivery at the point required.
• C.The cost of a product after analysing its components step by step
• D.A product cost estimate derived from a competitive market price.

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A hospital extensively spends on medical and implantable devices, medical, surgical and pharma-ceutical supplies, costs of supplies related to buildings and maintenance operations. Hospital's procurement manager suggests that the hospital has an opportunity to reduce operational costs by reducing variation of medical devices and pharmaceutical supplies. Which of the following best describe the procurement manager's suggestion?

• A.Process standardisation
• B.Product standardisation
• C.Value engineering
• D.Process re-engineering

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