Certified Supply Chain Professional (CSCP) Practice Exam

How are intangible costs characterized?

1. Easy to measure financially

2. Directly related to product pricing

3. Difficult to measure financially

4. Limited to physical assets

The correct answer is: Difficult to measure financially

Intangible costs are characterized by their difficulty in measurement financially. Unlike tangible costs, which can be easily quantified and assigned a specific monetary value, intangible costs often relate to non-physical factors such as brand reputation, customer satisfaction, employee morale, and knowledge assets. These elements do not have a straightforward way of being expressed in financial terms, making their quantification challenging. For instance, while customer loyalty can significantly impact future sales, determining an exact dollar figure for that loyalty is complex because it involves numerous variables, including market conditions and competitive influence. The difficulty in measuring these impacts is what primarily distinguishes intangible costs from more straightforward, tangible costs, which can be easily tracked and evaluated in financial statements.