Podcast
Questions and Answers
TCO analysis mainly focuses on one-time costs rather than recurring costs.
TCO analysis mainly focuses on one-time costs rather than recurring costs.
False
Activity-based costing (ABC) is not related to TCO analysis.
Activity-based costing (ABC) is not related to TCO analysis.
False
Total cost of ownership (TCO) is relevant only for businesses and not applicable in personal decision-making.
Total cost of ownership (TCO) is relevant only for businesses and not applicable in personal decision-making.
False
In TCO analysis, accurately allocating manufacturing overhead is not a significant challenge.
In TCO analysis, accurately allocating manufacturing overhead is not a significant challenge.
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Shifting focus from price to total cost is not necessary for supply managers.
Shifting focus from price to total cost is not necessary for supply managers.
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TCO analysis of equipment purchases does not consider maintenance and parts expenditures.
TCO analysis of equipment purchases does not consider maintenance and parts expenditures.
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TCO can be accurately estimated without involving different functions within an organization.
TCO can be accurately estimated without involving different functions within an organization.
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Supply managers should focus solely on the price of materials, services, and equipment, rather than the total cost of ownership.
Supply managers should focus solely on the price of materials, services, and equipment, rather than the total cost of ownership.
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TCO analysis should not be used on recurring material costs.
TCO analysis should not be used on recurring material costs.
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TCO analysis of equipment purchases usually does a lot to help reduce the expenditures for maintenance and parts over the lives of the investments.
TCO analysis of equipment purchases usually does a lot to help reduce the expenditures for maintenance and parts over the lives of the investments.
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Accurately allocating manufacturing overhead to products being purchased is an easy problem to resolve in TCO analysis.
Accurately allocating manufacturing overhead to products being purchased is an easy problem to resolve in TCO analysis.
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Activity-based costing (ABC) is a technique for directly assigning costs consumed by the object.
Activity-based costing (ABC) is a technique for directly assigning costs consumed by the object.
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TCO is not an analytical tool, but rather a philosophy.
TCO is not an analytical tool, but rather a philosophy.
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Accurate estimation of total costs requires a cross-functional approach, not just extensive time and motion studies by supply management.
Accurate estimation of total costs requires a cross-functional approach, not just extensive time and motion studies by supply management.
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TCO is not applicable in one's private life to enable better decision-making.
TCO is not applicable in one's private life to enable better decision-making.
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Study Notes
Total Cost of Ownership (TCO) Analysis
- TCO analysis mainly focuses on total costs, including one-time and recurring costs, rather than just the purchase price.
- Accurately allocating manufacturing overhead to products being purchased is a significant challenge in TCO analysis.
- TCO analysis is relevant for both businesses and personal decision-making.
- Shifting focus from price to total cost is necessary for supply managers to make informed decisions.
- TCO analysis of equipment purchases considers maintenance and parts expenditures to estimate the total cost over the life of the investment.
- TCO can only be accurately estimated by involving different functions within an organization.
Importance of TCO Analysis
- TCO analysis helps reduce expenditures for maintenance and parts over the lives of investments.
- Accurate estimation of total costs requires a cross-functional approach, involving different functions within an organization.
Relationship with Activity-Based Costing (ABC)
- Activity-based costing (ABC) is a technique related to TCO analysis, used for directly assigning costs consumed by the object.
Misconceptions about TCO
- TCO is an analytical tool, not just a philosophy.
- TCO is applicable in one's private life to enable better decision-making.
- Supply managers should focus on the total cost of ownership, not just the price of materials, services, and equipment.
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Description
Test your knowledge of Total Cost of Ownership (TCO) in supply chain management with these true or false questions. Learn about the philosophy of considering all supply chain related costs when doing business and the importance of shifting focus from price to total cost. Evaluate your understanding of TCO analysis for recurring material costs and labor base.
