APICS CPIM - PART 1 MODULE 5 EXAM
2024/2025
Inventory on the balance sheet at the end of the last year was $5,000,000. Inventory at the end of this
year was $4,000,000. Last year's annual cost of goods sold (COGS) was $3,000,000. This year's annual
COGS was $2,300,000. What is this year's inventory turnover? - Precise Answer ✔✔0.511 times
EXPLANATION:
Inventory Turnover = Annual COGS/Average Inventory in Dollars. Average Inventory = (Inventory at
Period Start + Inventory at Period End)/2. Since the inventory at the end of the last year will be the same
as the inventory at the beginning of this year, it can be used when calculating average inventory. Average
Inventory for this year: ($5,000,000 + $4,000,000)/2 = $4,500,000. Inventory Turnover =
$2,300,000/$4,500,000 = 0.511 times.
Which is a function of physical distribution? - Precise Answer ✔✔The activities of physical distribution
include transportation, distribution inventory, warehousing, material handling, and protective packaging.
What is the term for the difference between sales and cost of goods sold for an organization? - Precise
Answer ✔✔Gross profit margin
Which financial statement shows a company's debt? - Precise Answer ✔✔Balance Sheet
Which is a positive benefit that can be realized by implementing a new raw material ordering system that
reduces the total lead time of in-transit inventory by a full day? - Precise Answer ✔✔Raw material
inventory levels held at the plant for decoupling purposes can be reduced.
Which accounting method for valuing inventory estimates total cost, including allocated overhead, to
produce a batch of goods divided by the total number of units produced? - Precise Answer ✔✔Average
cost
Safety stock depends on which of the following? - Precise Answer ✔✔Variability of demand
, Finished goods being shipped from one facility to another is considered which type of inventory? -
Precise Answer ✔✔In-transit
On a balance sheet, assets are $1 million. If liabilities are $600,000, what is owners' equity? - Precise
Answer ✔✔$400,000
How is inventory turnover calculated? - Precise Answer ✔✔Cost of Goods Sold/Average Inventory
Investment
What is true in relation to cash flows and work-in-process (WIP) inventory? - Precise Answer ✔✔Labor,
materials, and overhead immediately become accounts payable or wages payable.
A manufacturer is experiencing a delay in raw materials delivery; the materials will arrive a week later
than expected. As a result, the manufacturer must adjust its level of safety stock. The company needs 85
units of safety stock to meet its customer service level. If the original lead time was six weeks, what is
the new level of safety stock required? - Precise Answer ✔✔92
EXPLANATION:
The new level of safety stock is equal to the old level of safety stock multiplied by the square root of the
new lead time divided by the old lead time—in this case, 85 times the square root of 7/6), or 85 times
1.08 = 92 (rounded).
Which organizational objectives are often tradeoffs with one another? - Precise Answer ✔✔Targeted
level of customer service and low-cost plant operation
When is finished goods safety stock or its equivalent needed least? - Precise Answer ✔✔For a popular
line of make-to-order garage doors.
Which of the following statements is true when production lead time is increased? - Precise Answer
✔✔Work-in-process inventory will increase.
What is the term for the target costs of an operation, process, or product including direct material, direct
labor, and overhead charges? - Precise Answer ✔✔Standard costs
2024/2025
Inventory on the balance sheet at the end of the last year was $5,000,000. Inventory at the end of this
year was $4,000,000. Last year's annual cost of goods sold (COGS) was $3,000,000. This year's annual
COGS was $2,300,000. What is this year's inventory turnover? - Precise Answer ✔✔0.511 times
EXPLANATION:
Inventory Turnover = Annual COGS/Average Inventory in Dollars. Average Inventory = (Inventory at
Period Start + Inventory at Period End)/2. Since the inventory at the end of the last year will be the same
as the inventory at the beginning of this year, it can be used when calculating average inventory. Average
Inventory for this year: ($5,000,000 + $4,000,000)/2 = $4,500,000. Inventory Turnover =
$2,300,000/$4,500,000 = 0.511 times.
Which is a function of physical distribution? - Precise Answer ✔✔The activities of physical distribution
include transportation, distribution inventory, warehousing, material handling, and protective packaging.
What is the term for the difference between sales and cost of goods sold for an organization? - Precise
Answer ✔✔Gross profit margin
Which financial statement shows a company's debt? - Precise Answer ✔✔Balance Sheet
Which is a positive benefit that can be realized by implementing a new raw material ordering system that
reduces the total lead time of in-transit inventory by a full day? - Precise Answer ✔✔Raw material
inventory levels held at the plant for decoupling purposes can be reduced.
Which accounting method for valuing inventory estimates total cost, including allocated overhead, to
produce a batch of goods divided by the total number of units produced? - Precise Answer ✔✔Average
cost
Safety stock depends on which of the following? - Precise Answer ✔✔Variability of demand
, Finished goods being shipped from one facility to another is considered which type of inventory? -
Precise Answer ✔✔In-transit
On a balance sheet, assets are $1 million. If liabilities are $600,000, what is owners' equity? - Precise
Answer ✔✔$400,000
How is inventory turnover calculated? - Precise Answer ✔✔Cost of Goods Sold/Average Inventory
Investment
What is true in relation to cash flows and work-in-process (WIP) inventory? - Precise Answer ✔✔Labor,
materials, and overhead immediately become accounts payable or wages payable.
A manufacturer is experiencing a delay in raw materials delivery; the materials will arrive a week later
than expected. As a result, the manufacturer must adjust its level of safety stock. The company needs 85
units of safety stock to meet its customer service level. If the original lead time was six weeks, what is
the new level of safety stock required? - Precise Answer ✔✔92
EXPLANATION:
The new level of safety stock is equal to the old level of safety stock multiplied by the square root of the
new lead time divided by the old lead time—in this case, 85 times the square root of 7/6), or 85 times
1.08 = 92 (rounded).
Which organizational objectives are often tradeoffs with one another? - Precise Answer ✔✔Targeted
level of customer service and low-cost plant operation
When is finished goods safety stock or its equivalent needed least? - Precise Answer ✔✔For a popular
line of make-to-order garage doors.
Which of the following statements is true when production lead time is increased? - Precise Answer
✔✔Work-in-process inventory will increase.
What is the term for the target costs of an operation, process, or product including direct material, direct
labor, and overhead charges? - Precise Answer ✔✔Standard costs
