CPSM EXAM 1 WITH ALL CORRECT & 100% VERIFIED
ANSWERS|LATEST UPDATE|ALREADY GRADED A+
Methods of communicating attributes of a product or service ✔Correct Answer-A) Performance &
design specs - define what the product or service must do. Often used with capital equip & services.
Performance spes. gives supplier the most control over how to satisfy the requirement. Design Specs
gives buyer most control.
B) Internal vs. external specs - if not the same product will cost more.
C) Supplier samples - a physical sample can serve as the spec when it meets the buyers needs.
Statement of Work (SOW) ✔Correct Answer-Is a spec for service to be performed. Two
components. 1. defines what product must look like or do and 2. quantitative to measure
performance.
Types of solicitation bids ✔Correct Answer-1. Offer to buy vs Offer to sell, 2. Informal
bid/quotation, 3. Electronic solicitations (RFx), 4. Competitive proposals, 5. Sealed bids / formal
advertising, 6. Restricted competition, 7. Non-competitive negotiations, 8. Two step bidding, 9.
alternative/innovative proposals, 10. Pricing models / market baskets, 11. Lotting strategies (online
bidding)
Request for Information (RFI) ✔Correct Answer-Are information request not binding on either
party. Results are usually in the form of price list or catalogs and helps supplier in budgeting process.
Potential draw backs, is that RFI's are overused and supplier may not respond.
Bidder's Conferences ✔Correct Answer-Used for more complex biding situations and detailed
information where dialog w/ buyer and supplier are required with engineering and supplier. Potential
problems is the time it takes to conduct.
Weighted average cost of capital formula ✔Correct Answer-X = Type of capital; Y = Total Capital; Z
=the interest rate (cost) or each type of capital; S=sum. Example:
Long term debt = 400K (capital type)
Preferred stock = 300K (capital type)
Total = 700K
Financing cost:
LTD: 6.2%
PS: 10.5%
Equation:
1. Debt Type/Total debt = debt type's % of debt.
2. Debt types % of debt * financing cost of debt type
3. If multiple debt types add up the sum of each from steps 1 & 2.
Sum of Years Digits Depreciation ✔Correct Answer-Takes the number of years of useful life of an
asset, counts back to one, and adds the digits together. This method depreciates more in the first few
years of an asset than the others.
Declining balance Depreciation ✔Correct Answer-Multiplying the book value by the constant
depreciation rate at the end of each fiscal period. Assumes matching has a higher value at beginning
of life than ant end and matches Depreciation with that assumption.
ANSWERS|LATEST UPDATE|ALREADY GRADED A+
Methods of communicating attributes of a product or service ✔Correct Answer-A) Performance &
design specs - define what the product or service must do. Often used with capital equip & services.
Performance spes. gives supplier the most control over how to satisfy the requirement. Design Specs
gives buyer most control.
B) Internal vs. external specs - if not the same product will cost more.
C) Supplier samples - a physical sample can serve as the spec when it meets the buyers needs.
Statement of Work (SOW) ✔Correct Answer-Is a spec for service to be performed. Two
components. 1. defines what product must look like or do and 2. quantitative to measure
performance.
Types of solicitation bids ✔Correct Answer-1. Offer to buy vs Offer to sell, 2. Informal
bid/quotation, 3. Electronic solicitations (RFx), 4. Competitive proposals, 5. Sealed bids / formal
advertising, 6. Restricted competition, 7. Non-competitive negotiations, 8. Two step bidding, 9.
alternative/innovative proposals, 10. Pricing models / market baskets, 11. Lotting strategies (online
bidding)
Request for Information (RFI) ✔Correct Answer-Are information request not binding on either
party. Results are usually in the form of price list or catalogs and helps supplier in budgeting process.
Potential draw backs, is that RFI's are overused and supplier may not respond.
Bidder's Conferences ✔Correct Answer-Used for more complex biding situations and detailed
information where dialog w/ buyer and supplier are required with engineering and supplier. Potential
problems is the time it takes to conduct.
Weighted average cost of capital formula ✔Correct Answer-X = Type of capital; Y = Total Capital; Z
=the interest rate (cost) or each type of capital; S=sum. Example:
Long term debt = 400K (capital type)
Preferred stock = 300K (capital type)
Total = 700K
Financing cost:
LTD: 6.2%
PS: 10.5%
Equation:
1. Debt Type/Total debt = debt type's % of debt.
2. Debt types % of debt * financing cost of debt type
3. If multiple debt types add up the sum of each from steps 1 & 2.
Sum of Years Digits Depreciation ✔Correct Answer-Takes the number of years of useful life of an
asset, counts back to one, and adds the digits together. This method depreciates more in the first few
years of an asset than the others.
Declining balance Depreciation ✔Correct Answer-Multiplying the book value by the constant
depreciation rate at the end of each fiscal period. Assumes matching has a higher value at beginning
of life than ant end and matches Depreciation with that assumption.
