1 Exampromax - Stuvia US 2025/2026
CPSM Exam 1 Questions and 100% Correct Answers
Already Graded A+
Q: Methods of communicating attributes of a product or service
Ans: 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.
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Q: Statement of Work (SOW)
Exampromax - Stuvia US
Ans: 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.
Q: Types of solicitation bids
Ans: 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)
Q: Request for Information (RFI)
Ans: 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.
Q: Bidder's Conferences
Ans: 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.
Q: Weighted average cost of capital formula
, 2 Exampromax - Stuvia US 2025/2026
Ans: 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.
Q: Sum of Years Digits Depreciation
Ans: Takes the number of years of useful life of an asset, counts back to one, and
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adds the digits together. This method depreciates more in the first few years of an
asset than the others.
Exampromax - Stuvia US
Q: Declining balance Depreciation
Ans: 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.
Q: Straight line depreciation
Ans: The simplest to calculate and assumes that a machines depreciation is related
to function of time not it's use.
Q: Centralized Buying
Ans: Is an organizational policy and structure in which the authority and
responsibility for most supply related functions and decisions are assigned to a central
organization. Decisions are made in one spot, not all people are necessarily located in
one spot.
Q: Lead division buying
Ans: Where one division is the primary user of a commodity, product, or service so it
negotiates the contracts for the entire company (other divisions).
Q: Cooperative purchasing
CPSM Exam 1 Questions and 100% Correct Answers
Already Graded A+
Q: Methods of communicating attributes of a product or service
Ans: 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.
© 2025 Assignment Expert
Q: Statement of Work (SOW)
Exampromax - Stuvia US
Ans: 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.
Q: Types of solicitation bids
Ans: 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)
Q: Request for Information (RFI)
Ans: 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.
Q: Bidder's Conferences
Ans: 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.
Q: Weighted average cost of capital formula
, 2 Exampromax - Stuvia US 2025/2026
Ans: 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.
Q: Sum of Years Digits Depreciation
Ans: Takes the number of years of useful life of an asset, counts back to one, and
© 2025 Assignment Expert
adds the digits together. This method depreciates more in the first few years of an
asset than the others.
Exampromax - Stuvia US
Q: Declining balance Depreciation
Ans: 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.
Q: Straight line depreciation
Ans: The simplest to calculate and assumes that a machines depreciation is related
to function of time not it's use.
Q: Centralized Buying
Ans: Is an organizational policy and structure in which the authority and
responsibility for most supply related functions and decisions are assigned to a central
organization. Decisions are made in one spot, not all people are necessarily located in
one spot.
Q: Lead division buying
Ans: Where one division is the primary user of a commodity, product, or service so it
negotiates the contracts for the entire company (other divisions).
Q: Cooperative purchasing
