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
Activity-based costing (ABC) differs from traditional packaging cost accounting primarily because it:
Answer: Assigns costs to products based on the specific activities and resources each product consumes
ABC traces overhead to cost objects by identifying activities and their drivers, giving more accurate per-SKU costs than blanket overhead rates.
A company compares two packaging configurations: Option A has a lower unit cost but higher distribution damage rate; Option B has a higher unit cost but near-zero damage. Which cost approach best captures the true comparison?
Answer: Total cost of ownership (TCO)
TCO accounts for acquisition, use, damage, returns, and end-of-life costs, making it the correct framework when downstream costs differ significantly between options.
When performing a packaging lifecycle cost analysis, which of the following is typically a 'hidden' cost that traditional purchasing overlooks?
Answer: Reverse logistics and disposal fees
Disposal and reverse logistics costs occur after purchase and often fall to a different budget, making them invisible in standard procurement comparisons.
A cost model for a flexible pouch includes raw film ($0.12), converting ($0.05), filling ($0.03), and warehousing ($0.01). The largest cost reduction lever identified by Pareto analysis is:
Answer: Raw film
Pareto analysis focuses effort on the highest-cost element; at $0.12, raw film represents the largest share and therefore the greatest cost reduction opportunity.
Fixed costs in a packaging operation are best described as costs that:
Answer: Remain constant regardless of production volume within a relevant range
Fixed costs (e.g., depreciation, lease payments) do not change with output volume within a defined relevant range, unlike variable costs.
A packaging line runs at 70% capacity. Adding a new SKU would increase volume enough to reach 90% capacity. The incremental cost analysis should focus on:
Answer: Marginal (variable) cost of the additional volume, since fixed costs are already covered
When fixed costs are already covered, the relevant cost for the incremental volume decision is only the additional variable costs incurred.
A teardown analysis in packaging VE involves:
Answer: Physically disassembling and costing each component of a reference package to identify cost reduction benchmarks
Teardown analysis (reverse costing) dissects a benchmark package component by component to estimate should-cost and surface design alternatives.