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CIPS Defining Business Needs Sample Questions (Q130-Q135):

NEW QUESTION # 130
A garment manufacturer supplies global retailers with t-shirts, shirts, and linen trousers. Because of currency fluctuations, the manufacturer is aware that they must control their direct costs in order to ensure profits. Which of the following is a direct cost for the garment manufacturer?

• A. Cotton fabric
• B. Facilities rent
• C. Office staff payroll
• D. Utilities cost

Answer: A

Explanation:
Detailed Explanation:Cotton fabric is a direct cost because it is directly attributable to the production of the garments. Costs like rent, utilities, and payroll are indirect costs associated with running the business.
Reference: CIPS Level 4, Cost Categorization in Procurement.

 

NEW QUESTION # 131
A "modified re-buy" means ...

• A. The existing supplier should be asked to supply the requirement because it is a modified re-buy of the same item
• B. Both the specification and the market should be reviewed to manage the new circumstances
• C. The specification should not be considered for future treatment as a stock item because of the modification
• D. The existing specifications should be reviewed but not the supply market, as this type of purchase is complex

Answer: B

 

NEW QUESTION # 132
A state school has a procurement requirement to buy new art materials for the next school semester and needs to forecast purchases against its restricted budget. What would be the key business requirement in this purchasing decision?

• A. Total cost of goods
• B. Social impact
• C. Timescales of delivery
• D. Quality of materials

Answer: A

 

NEW QUESTION # 133
Company A sells a product for $100. The total unit variable costs are $60. Fixed costs as in its ac-count are $20,000. How many products does the company have to sell to achieve break-even point?

• A. 0
• B. 1
• C. 2
• D. 3

Answer: B

Explanation:
Break even point = Fixed costs/(Price-variable cost). In this case, break even point = 20,000/(100-60) = 500 Reference:
LO 1, AC 1.2

 

NEW QUESTION # 134
Which of these are variable costs?
* Staff overtime
* Premises costs
* Insurance costs
* Material costs

• A. 2 and 3
• B. 3 and 4
• C. 1 and 4
• D. 1 and 2

Answer: C

 

NEW QUESTION # 135
......

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