Certified Supply Chain Professional (CSCP) Practice Exam

How is purchase price defined?

1. Cost of logistics involved in the acquisition

2. Price per unit of materials obtained from suppliers

3. Total production cost per batch

4. Cost of all operational activities

The correct answer is: Price per unit of materials obtained from suppliers

The purchase price is defined as the price per unit of materials obtained from suppliers. This definition highlights the specific cost associated with acquiring goods or raw materials necessary for production or resale, which is primarily focused on the unit price rather than other related costs. Understanding the purchase price in this context is crucial for supply chain management professionals, as it directly impacts budgeting and financial planning. By knowing how much each unit costs, organizations can effectively calculate the overall expenditure required for materials, leading to better pricing strategies and cost control measures. Recognizing this, it's important to differentiate the purchase price from other costs that may be associated with the procurement process. For instance, while logistics and operational costs do play a role in the overall supply chain expenses, they are not included in the definition of purchase price, which is strictly the unit price from the supplier. This clarity helps prevent confusion and ensures accurate financial assessments when managing supplier relationships and inventory.