CPSM DIAGNOSTIC EXAM - COMPLETE QUESTIONS AND
DETAILED SOLUTIONS LATEST UPDATE THIS YEAR JUST
RELEASED
Question 1: A supply manager for an apparel company must decide
whether to change suppliers of polyurethane hangers for the
finished products that are shipped to retailers. It will cost
approximately $20,000 to make all of the necessary changes to the
company's operation in order to take on a new supplier. The
current supplier is priced $0.05 per unit higher than the lowest
competitor. The lowest competitor's quality and service are equal
to that of the current supplier. What quantity of hangers will the
supply manager need to buy to justify making the change on a cost
basis?
(A) 40,001
(B) 50,001
(C) 400,001
(D) 500,001
Answer:
(C) 400,001
Question 2: A company wishes to reduce costs on a product it
manufactures. The company is considering a capital expenditure of
$80,000, which would generate an annual net cash flow of $30,000
beginning in year one. Marketing has determined the product will
be sold for three years after the new equipment is installed. The
company expects an annual discount rate of 8%. What is the net
present value of this opportunity?
(A) -$9,200
(B) -$2,688
(C) $3,600
, (D) $10,000
Answer:
(B) -$2,688
Question 3: What is the method of depreciation that assumes that
an item's utility declines over time, resulting in significantly higher
depreciation in the earlier years?
(A) Declining Balance Method
(B) Straight Line Method
(C) Sum of Years Digits Method
(D) Units of Activity Method
Answer:
(D) Units of Activity Method
Question 4: Which of the following depreciation methods is
compatible with the matching principle where the higher
depreciation expense in earlier years parallels the asset's greater
earning power?
(A) Declining Balance Method
(B) Straight Line Method
(C) Sum of Years Digits Method
(D) Units of Activity Method
Answer:
(A) Declining Balance Method
Question 5: Which of the following depreciation methods is the
simplest to calculate and makes the assumption that it is a function
of time rather than use?
(A) Declining Balance Method
, (B) Straight Line Method
(C) Sum of Years Digits Method
(D) Units of Activity Method
Answer:
(B) Straight Line Method
Question 6: The interest rate levels arc most directly affected by
fluctuations in which of the following?
(A) International currency exchange rates
(B) The Dow Jones Industrial Average
(C) The rare of business failures
(D) The money supply
Answer:
(D) The money supply
Question 7: Commodity purchases fluctuate in a spot market
primarily because the demand is
(A) dependent
(B) independent
(C) price elastic
(D) price inelastic
Answer:
(C) price elastic
Question 8: The consolidation of requirements from multiple
buying organizations into a single large order to obtain quantity
discounts is called
(A) hybrid buying
(B) center-led buying
, (C) commodity buying
(D) cooperative buying
Answer:
(D) cooperative buying
Question 9: A supply manager is evaluating several potential
overseas suppliers, and the degree of risk each would bring to the
supply chain. Which of the following employment characteristics
would be MOST favorable in a manufacturing relationship?
(A) Employment-for-life practices
(B) Flexibility in hiring and firing employees
(C) High unemployment rates
(D.) High union membership of skilled labor
Answer:
(B) Flexibility in hiring and firing employees
Question 10: A supply manager is evaluating potential overseas
suppliers located in underdeveloped countries. In examining the
infrastructure of each country, which of the following
considerations is LEAST important?
(A) Currency exchange rate
(B) Stability of the government
(C) Technology availability
(D) Transportation systems
Answer:
(A) Currency exchange rate
Question 11: A manufacturer's solicitation documents will on
occasion include detailed design specifications that are considered
DETAILED SOLUTIONS LATEST UPDATE THIS YEAR JUST
RELEASED
Question 1: A supply manager for an apparel company must decide
whether to change suppliers of polyurethane hangers for the
finished products that are shipped to retailers. It will cost
approximately $20,000 to make all of the necessary changes to the
company's operation in order to take on a new supplier. The
current supplier is priced $0.05 per unit higher than the lowest
competitor. The lowest competitor's quality and service are equal
to that of the current supplier. What quantity of hangers will the
supply manager need to buy to justify making the change on a cost
basis?
(A) 40,001
(B) 50,001
(C) 400,001
(D) 500,001
Answer:
(C) 400,001
Question 2: A company wishes to reduce costs on a product it
manufactures. The company is considering a capital expenditure of
$80,000, which would generate an annual net cash flow of $30,000
beginning in year one. Marketing has determined the product will
be sold for three years after the new equipment is installed. The
company expects an annual discount rate of 8%. What is the net
present value of this opportunity?
(A) -$9,200
(B) -$2,688
(C) $3,600
, (D) $10,000
Answer:
(B) -$2,688
Question 3: What is the method of depreciation that assumes that
an item's utility declines over time, resulting in significantly higher
depreciation in the earlier years?
(A) Declining Balance Method
(B) Straight Line Method
(C) Sum of Years Digits Method
(D) Units of Activity Method
Answer:
(D) Units of Activity Method
Question 4: Which of the following depreciation methods is
compatible with the matching principle where the higher
depreciation expense in earlier years parallels the asset's greater
earning power?
(A) Declining Balance Method
(B) Straight Line Method
(C) Sum of Years Digits Method
(D) Units of Activity Method
Answer:
(A) Declining Balance Method
Question 5: Which of the following depreciation methods is the
simplest to calculate and makes the assumption that it is a function
of time rather than use?
(A) Declining Balance Method
, (B) Straight Line Method
(C) Sum of Years Digits Method
(D) Units of Activity Method
Answer:
(B) Straight Line Method
Question 6: The interest rate levels arc most directly affected by
fluctuations in which of the following?
(A) International currency exchange rates
(B) The Dow Jones Industrial Average
(C) The rare of business failures
(D) The money supply
Answer:
(D) The money supply
Question 7: Commodity purchases fluctuate in a spot market
primarily because the demand is
(A) dependent
(B) independent
(C) price elastic
(D) price inelastic
Answer:
(C) price elastic
Question 8: The consolidation of requirements from multiple
buying organizations into a single large order to obtain quantity
discounts is called
(A) hybrid buying
(B) center-led buying
, (C) commodity buying
(D) cooperative buying
Answer:
(D) cooperative buying
Question 9: A supply manager is evaluating several potential
overseas suppliers, and the degree of risk each would bring to the
supply chain. Which of the following employment characteristics
would be MOST favorable in a manufacturing relationship?
(A) Employment-for-life practices
(B) Flexibility in hiring and firing employees
(C) High unemployment rates
(D.) High union membership of skilled labor
Answer:
(B) Flexibility in hiring and firing employees
Question 10: A supply manager is evaluating potential overseas
suppliers located in underdeveloped countries. In examining the
infrastructure of each country, which of the following
considerations is LEAST important?
(A) Currency exchange rate
(B) Stability of the government
(C) Technology availability
(D) Transportation systems
Answer:
(A) Currency exchange rate
Question 11: A manufacturer's solicitation documents will on
occasion include detailed design specifications that are considered
