[Feb-2023] Get 100% Real Free CIPS Level 4 Diploma in Procurement and Supply L4M2 Sample Questions [Q72-Q91]

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[Feb-2023] Get 100% Real Free CIPS Level 4 Diploma in Procurement and Supply L4M2 Sample Questions

Accurate L4M2 Questions with Free and Fast Updates

NEW QUESTION 72
Halfords is a major bicycle and car parts retailer with long history in the market. Its suppliers are plentiful and there is no threat of forward integration. Some other smaller retailers are applying 3D-printing technology to make personalized bicycle parts but their market share is relatively low. 3D-printing technology is an example of which competitive force?

Bargaining power of buyer

Threat of substitute

Rivalry within the industry

New entrants may enter the market

NEW QUESTION 73
British Steel needs to source a set of instruments that will improve quality of steel. Without these instruments British Steel will loss control of the temperature. The bucket may freeze up, or if it is too hot it leaks out of the casting process, damaging the machine. There is limited supply on the market and quality varies greatly. Which of the following will be the most appropriate managing approach to procure these items?

Bundle these instruments into larger contract

Leverage market competition to drive down cost

Seek continuity of supply

Form partnership with supplier

NEW QUESTION 74
Which of the following standards specifies requirements for a quality management system?

ISO 27001

ISO 9001:2015

ISO 22000:2018

ISO 14001:2015

NEW QUESTION 75
At which stage of through-life contract management, procurement team needs to identify sources of risk and the ways to mitigate them?

Specification stage

Supplier relationship stage

Tendering stage

Contracting stage

NEW QUESTION 76
Which of the following can cause overhead variance? Select TWO that apply:

Rising production worker’s wage rate per hour

Decrease in production volume

Spike in material price

Decreasing packaging costs

Spike in monthly leasing fee

Overhead variances arise when the actual overhead costs incurred differ from the expected amounts. Managers want to understand the reasons for these differences, and so should consider computing one or more of the overhead variances described below. Each of these variances applies to a different aspect of overhead expenditures. It is not necessary to calculate these variances when a manager cannot influence their outcome.
Fixed Overhead Spending Variance
The fixed overhead spending variance is the difference between the actual fixed overhead expense incurred and the budgeted fixed overhead expense. An unfavorable variance means that actual fixed overhead expenses were greater than anticipated. The formula for this variance is:
Actual fixed overhead – Budgeted fixed overhead = Fixed overhead spending variance The amount of expense related to fixed overhead should (as the name implies) be relatively fixed, and so the fixed overhead spending variance should not theoretically vary much from the budget.
Fixed Overhead Volume Variance
The fixed overhead volume variance is the difference between the amount of fixed overhead actually applied to produced goods based on production volume, and the amount that was budgeted to be applied to produced goods. For example, a company budgets for the allocation of $25,000 of fixed overhead costs to produced goods at the rate of $50 per unit produced, with the expectation that 500 units will be produced. However, the actual number of units produced is 600, so a total of $30,000 of fixed overhead costs are allocated. This creates a fixed overhead volume variance of $5,000.
Variable Overhead Efficiency Variance
The variable overhead efficiency variance is the difference between the actual and budgeted hours worked, which are then applied to the standard variable overhead rate per hour. The formula is:
Standard overhead rate x (Actual hours – Standard hours)
= Variable overhead efficiency variance
A favorable variance means that the actual hours worked were less than the budgeted hours, resulting in the application of the standard overhead rate across fewer hours, resulting in less expense being incurred. However, a favorable variance does not necessarily mean that a company has incurred less actual overhead, it simply means that there was an improvement in the allocation base what was used to apply overhead.
Variable Overhead Spending Variance
The variable overhead spending variance is the difference between the actual and budgeted rates of spending on variable overhead. The variance is used to focus attention on those overhead costs that vary from expectations. The formula is:
Actual hours worked x (Actual overhead rate – standard overhead rate)
= Variable overhead spending variance
A favorable variance means that the actual variable overhead expenses incurred per labor hour were less than expected.
In the study guide, CIPS splits overhead variance into volume and expenditure variance. They can be understood as variable and fixed overhead variance respectively.
Reference:
– CIPS study guide page 59
– What are overhead variances? – AccountingTools
LO 1, AC 1.4

NEW QUESTION 77
Which of the following areas is specified by ISO/IEC 27001 family?

The dimensions and associated tolerances for a series of housings for piston seals

The requirements for an information security management system

Evaluation and assessment of mutual agreed customer food safety requirements

The requirements for an environmental management system

NEW QUESTION 78
A company is analysing its existing product’s components and aims at reducing costs without damaging customer value proposition. They want to check which components are critical and which are unnecessary. Which of the following should be adopted by the company?

Under specification

Value engineering

Value analysis

Variety reduction

NEW QUESTION 79
Which of the following are the causes of material cost variance?
1. The buyer updates purchase-to-pay system to track payment and delivery
2. An unprocessed goods received note is missing
3. The employees must work overtime to catch up with the customers’ orders
4. The purchase is made in emergency

2 and 4 only

1 and 4 only

1 and 3 only

2 and 3 only

NEW QUESTION 80
A procurement manager is discussing with other stakeholders about the scope and the implementation of the upcoming construction project. A stakeholder argues that the construction projects are often risky as the overall scope of the work can’t be accurately estimated from the beginning. Furthermore, the project spans over a long period, the costs of materials can fluctuate widely. The procurement manager suggests that the pricing structure should be able to cover the supplier’s costs plus 10% markup on total costs. This arrangement is known as…?

Cost-plus fixed-fee

Cost-plus award fee

Cost-plus incentive fee contracts

Cost-plus Fixed percentage

NEW QUESTION 81
Sabic is a petrochemical manufacturer. It wants to digitalise its operation and is looking for new IT system. The procurement manager approaches this matter with a through-life specification. He supposes that stating “good quality” in the specification will be enough for quality standard section. Is the procurement manager’s thought appropriate?

Yes, because the specification should be concise.

No, because “good quality” is an in-house jargon that suppliers are not familiar with

Yes, because IT sector has its own standard of quality, therefore, suppliers may deliver good quality without any further Explanation:

No, because “good quality” is very ambiguous for suppliers to identify Sabic’s re-quirement

NEW QUESTION 82
Which of the following are likely to be disadvantages of using outcome-based specifications? Select THREE that apply

Time consuming to produce

Stifling innovation

Difficulty to measure performance

Long time delay between action and result

Responsibility for product failure falling to buyer

Ambiguity of outcome

NEW QUESTION 83
A buying organisation may not have technical capability to produce a highly complex specification. Which of the following are sources of information that can be used to create the specification? Select TWO that apply

Standard terms and conditions

Name cards

Industry standards

Suppliers’ know-how

Constitution

NEW QUESTION 84
Which of the following factors is most likely to be a barrier to new entrant in agriculture?

High margins

Capital requirement

Reputation within the industry

Brand recognition

NEW QUESTION 85
A procurement team is categorising their purchased items into four quadrants of Kraljic’s supply chain portfolio matrix. They realise that there are some low-value items which come from very few suppliers in the market. The organisation is critically dependent on these suppliers. The team plans to reduce the dependence by finding alternative sources. Is this a right course of action?

Yes, the organisation needs to reduce the supply risks

No, the organisation should run competitive biddings to exploit the competition

No, there is no way to escape this dependency

Yes, this action will dramatically increase the supplier’s bargaining power

NEW QUESTION 86
Buyers in the same industry with the same understanding of relative value and price may still make different decisions about whether to switch. Which of the following factors may prompt a buying organization to incline toward substitute products?
1. There is potential for backward integration
2. Access to financial resources
3. The switching cost is high
4. The substitute fits organisation’s strategy

1 and 4 only

3 and 4 only

1 and 2 only

2 and 4 only

The threat of substitution is a function of three factors:
* The relative value/ price of a substitute compared to an industry’s product
* The cost of switching to the substitute
* The buyer’s propensity to switch
Buyers with different circumstances and in different industries do not all have equal propensities to substitute when faced with a comparable economic motivation. Differences in their circumstances lead buyers to respond to a given relative value to price (RVP) and switching cost differently. While such differences might be treated as factors that modify RVP or switching costs, it is more helpful in practice to isolate them.
Resources. Substitution often involves up-front investments of capital and other resources. Access to such resources will differ from one buyer to another.
Risk Profile. Buyers often have very different risk profiles, the result of such things as their past history, age and income, ownership structure, background and orientation of management, and nature of competition in their industry. Buyers prone to risk taking are more likely to substitute than buyers that are risk-averse.
Technological Orientation. Buyers experienced with technological change may be less concerned with some kinds of substitution risks, while extremely aware of others that a less technologically sophisticated buyer would be oblivious to.
Previous Substitutions. The second substitution may be easier for a buyer than the first, unless the first substitution has been a failure. The buyer’s uncertainties over undertaking a substitution may have diminished if a past substitution has been successful, or risen if a past substitution has led to difficulties. In the soft drink industry, this seems to have worked to the benefit of aspartame.
Intensity of Rivalry. Buyers under intense competitive pressure and searching for competitive ad-vantage will tend to substitute more quickly to gain a given advantage than those that are not.
Generic Strategy. The RVP of a substitute will have different significance depending on the com-petitive advantage that industrial, commercial, or institutional buyers are seeking or the value of time and particular performance needs of the household buyer. A substitute that offers a cost saving will tend to be of more interest to a cost leader than a differentiator, for example.
Many of these factors that shape the buyer’s propensity to substitute will be a function of the particular decision maker who is involved in the purchase decision.
Porter, Michael E.. Competitive Advantage: Creating and Sustaining Superior Performance (p. 278-289). Free Press. Kindle Edition.
Reference:
LO 2, AC 2.2

NEW QUESTION 87
Which of the following statements is true about product life cycle?

The price remains static throughout the product life cycle

The price competition will be the fiercest at the declining stage because the inventories are plentiful

If price skimming is adopted, the supplier will gradually lower the price when it attracts enough buyers

Sale volume will be the highest at the introductory stage

A product’s life cycle portrays the length of time a product is in the market; from the beginning of its introduction to consumers until it is removed from shelves and phased out. This cycle is often divided into four phases: introduction, growth, maturity, and decline. Depending on the relevant stage, companies will set an according strategy to achieve their desired targets. Pricing and promotions play a pivotal role in the design of these product life cycle strategies. Therefore, product life cycle management, the process of strategizing ways to continuously support and maintain a product, is seen more and more at pricing mature players and could bring real value to your company.
Introduction phase: during the introduction phase, the new product is introduced to consumers and a substantial amount of money is invested in advertising and marketing campaigns to bring awareness of the product to the customer. In this phase competition is low, but units sold will also correspondingly be quite low as well still. Consumers need to be convinced of the benefits of the product. Lots of articles never make it beyond this phase: e.g. 3D televisions.
Profits in the introduction stage tend to be low or there may even be a loss. This is because the cost of marketing to establish product awareness plus distribution costs can be far higher than the revenue received from sales. This can be offset to a degree by ‘skimming’ price in the very early stages. Skimming a price is where a business charges the highest price that it thinks the market will bear initially until product recognition brings in other buyers and then the price drop.
Growth phase: when it’s shown there is proven demand for the product and consumers are buying it, the next stage will be its growth phase. This phase is punctuated by increasing demand, increas-ing production and an increase in the competitive landscape. Availability of the product is under-standably paramount during this phase, going out of stock is unthinkable during the growth period.
The electric car is an example of a product that is currently in the midst of the growth phase.
Maturity phase: normally the maturity phase is the phase that is characterized by declining production and marketing costs due to synergies and economies of scale. During this phase the first signs of market saturation occur and most consumers or households already own the product. Sales numbers still grow, but at a slower pace. In the maturity phase, price competition becomes intense, a broader range of distribution channels are deployed and competition is more focused on competitive pricing, marginal product differences or the difference in services or promotions. This period in the PLC is often said to be the ‘cash-cow period’.
That being said, the idea of ‘Maturity from the start’ also exists. This occurs when a brand decides to launch a product extension and directly follows up the maturity phase of an earlier version of the product. For example, the iPhoneX followed up from the ‘normal’ iPhone-series and therefore the iPhoneX never had to undergo the introduction or growth phase, but immediately started in its maturity phase.
Decline phase: the final phase of the PLC is entered once the product loses market share to other, newer products and the competitive landscape becomes too hard to survive. During this stage, de-mand declines, companies are left with overstock with prices and margins getting depressed. Therefore retailers and brands normally start stunting with promotions during the decline of the PLC to sell their final stock.
A well-known example of a product that has been through the decline phase were the Nokia phones; sales results dramatically decreased after the introduction of the iPhone.
Reference:
– CIPS study guide page 90
– Adjusting your Pricing Strategy to the Product Life Cycle Stage (omniaretail.com)
– Price Skimming Definition (investopedia.com)
LO 2, AC 2.2

NEW QUESTION 88
Royal Navy is preparing a through-life contract. They put to the contract a term on rectification of operational defects and planning and delivery of Fleet Time Support Periods. Which part of through-life requirement does this term belong to?

Installation

In-service support

Manufacture

Customer support

NEW QUESTION 89
XYZ Ltd is producing an engine which consists of many components. The procurement manager wants to find cost reduction opportunities and minimise part varieties. Which of the following may help her to achieve these objectives?
1. Value analysis
2. Segment analysis
3. Variety reduction
4. Standardisation

2 and 3 only

1 and 3 only

3 and 4 only

1 and 4 only

NEW QUESTION 90
Which of the following provides in-depth detail for both functional and non-functional require-ments and covers assumptions, constraints, performance, dimensions, weights and reliability of a product?

Performance specification

Tolerance

Statement of work

Design specification

NEW QUESTION 91
Which of the following bodies provides standards for the products and services in the US?

ISO

ANSI

AFNOR

BSI

CIPS L4M2 Exam Syllabus Topics:

Topic	Details
Topic 1	Output or outcome, statement of work based specifications Types of market data that can provide information on costs and prices
Topic 2	Monitor specification creation by colleagues and other internal stakeholders Analyse how business needs influence procurement decisions
Topic 3	Understand the use of specifications in procurement and supply Analyse the different types of markets utilised by procurement and supply
Topic 4	Identify sections of specifications for through life contracts Identify how costs and prices can be estimated for procurement activities
Topic 5	Identify opportunities to regulate short and longer term specifications Procurement’s role in developing a business case
Topic 6	Provide guidance to internal stakeholders on implementation Implications of the business needs on the types of purchase
Topic 7	Identify the risks that can result from inadequate specifications and mitigation approaches Use information to prepare budgets or to negotiate prices
Topic 8	Analyse the criteria that can be applied in the creation of a business case Availability of substitutes and threat of entry

L4M2 Study Guide Realistic Verified Dumps: https://www.prepawaypdf.com/CIPS/L4M2-practice-exam-dumps.html

[Feb-2023] Get 100% Real Free CIPS Level 4 Diploma in Procurement and Supply L4M2 Sample Questions [Q72-Q91]

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