CPP Cost Management & Budgeting Flashcards
6 cards from real CPP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 CPP Cost Management & Budgeting flashcards as text
Which cost category typically represents the largest portion of total packaging cost for most consumer goods?
Answer: Raw material and component costs
Raw material and component costs (substrates, closures, labels, inks) typically account for the largest share of total packaging cost in consumer goods manufacturing.
What is 'value engineering' in packaging cost management?
Answer: A systematic method to improve the value of packaging by optimizing function relative to cost
Value engineering in packaging is a systematic review to improve the ratio of function to cost — maintaining or improving performance while reducing unnecessary expense.
What does 'total cost of ownership' (TCO) mean in packaging procurement?
Answer: All costs associated with packaging including purchase price, handling, waste, and disposal
TCO in packaging procurement includes not just purchase price but also freight, handling, storage, waste disposal, quality failures, and any other cost incurred over the packaging's lifecycle.
What is 'activity-based costing' (ABC) as applied to packaging operations?
Answer: A costing method that allocates overhead based on each activity's actual resource consumption
Activity-based costing allocates overhead costs to packaging activities based on actual resource usage, giving a more accurate picture of true packaging costs than simple volume-based allocation.
What is a 'landed cost' in packaging procurement?
Answer: The total cost of a purchased packaging component including purchase price, freight, duties, and insurance
Landed cost is the total cost to acquire a packaging component, including the supplier price, international freight, customs duties, insurance, and port handling fees.
Which financial metric measures the profitability of a packaging investment relative to its cost?
Answer: Return on investment (ROI)
Return on investment (ROI) is calculated as net benefit divided by cost, expressed as a percentage, and is the most commonly used metric to evaluate packaging investment profitability.