CIPS Commercial Negotiation L4M5 Question # 78 Topic 8 Discussion

CIPS Commercial Negotiation L4M5 Question # 78 Topic 8 Discussion

L4M5 Exam Topic 8 Question 78 Discussion:
Question #: 78
Topic #: 8

When engaging in commercial negotiations, it is important to bear in mind that the suppliers need to make a reasonable profit to maintain continuity of supply. It is therefore necessary for the buyer to have a clear understanding of the break-even analysis concept which relates to cost, volume, and profit.

What is 'contribution' in relation to break-even analysis?


A.

The gains that the supplier receives when the sales revenue exceeds fixed costs


B.

The gains from sales revenue that the supplier is willing to contribute in a profit-sharing contractual arrangement


C.

The gains that the supplier receives when the sales revenue exceeds variable costs


D.

The gains from sales revenue which the supplier retains as reserves to contribute to future development projects


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