Cost Analysis & Value Engineering Flashcards
7 cards from real CPT practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Cost Analysis & Value Engineering flashcards as text
A packaging capital investment with an initial outlay of $200,000 generates annual net cash savings of $60,000. The simple payback period is:
Answer: 3.3 years
Simple payback = initial investment ÷ annual savings = $200,000 ÷ $60,000 = 3.33 years.
Net present value (NPV) is preferred over simple payback for packaging investment decisions primarily because:
Answer: NPV accounts for the time value of money and the total value generated over the project life
NPV discounts future cash flows to present value, recognizing that a dollar saved in year 5 is worth less than a dollar saved today.
A packaging line's Overall Equipment Effectiveness (OEE) is the product of which three factors?
Answer: Availability, performance, and quality rate
OEE = Availability × Performance × Quality; it captures losses from downtime, speed reductions, and defects in a single efficiency metric.
Value stream mapping (VSM) in a packaging context is primarily used to:
Answer: Identify waste and non-value-added steps across the packaging material and production flow
VSM visualizes every step in the packaging value stream — from material receipt to finished goods — to expose delays, excess inventory, and non-value-added activities.
Benchmarking in packaging cost analysis involves comparing your packaging costs and performance to:
Answer: Best-in-class competitors or industry standards to identify performance gaps
Benchmarking identifies gaps between your current performance and best-in-class results, directing improvement priorities toward areas with the most competitive exposure.
When a packaging cost reduction initiative is achieved by reducing pack weight 10%, the resulting unit-cost saving is best characterized as a:
Answer: Variable cost reduction scaling with volume
Material cost is variable; a 10% weight reduction cuts material spend on every unit produced, so total savings scale proportionally with volume.
A break-even analysis for a new packaging format shows the break-even volume is 500,000 units per year, but current volume is 300,000 units. The most appropriate recommendation is to:
Answer: Delay adoption until volume is projected to reach or exceed 500,000 units, or find ways to lower fixed costs to shift break-even lower
If current volume is below break-even, the investment will not recover its fixed costs at present scale; the team should grow volume or reduce fixed costs before committing.