Reference no: EM133030823

Costs as a % of Sales: TOTAL COGS: Firm 1: 80%; Firm 2: 60%

- Raw Materials :Firm 1 - 30%; Firm 2: 20%

-Inventory Carrying Costs: Firm 1: 30%; Firm 2: 15%

- Misc: Firm 1: 20%; Firm 2: 25%

SG&A: Firm 1 at 10%; Firm 2 at 15%

Total Costs: Firm 1: 90%; Firm 2 - 75%

1) Which of the following can you conclude from the data in Table 1

A - Firm 2 has lower total costs per until than Firm 1

B - Firm 1 inventory carrying costs per unit are double those of Firm 2

c - Firm 2 total dollar expenditure for raw materials was great than firm 1

d - none of the above

2) Using table above, which of following can you conclude about COGS

a - raw materials are smaller share of COGS for Firm 1 than 2

b - Firm 2 per unit raw material costs were smaller than firm 1

c - Firm 1 could save on inventory carry costs by imitating firm 2

d - none of the above

3) In general, a relative costs analysis like this can help determine:

a - value created by firm

b - value captured by each firms suppliers

c - firms cost position relative to rivals

d - the primary activities that drive willingness to pay