Certified Supply Chain Professional CSCP Practice Supply Chain Financial Management and Cost Analysis

Question 1

Total cost of ownership (TCO) in sourcing includes:

Accepted Answer

All costs of acquiring, using and disposing of a good or service, including price, quality, delivery, inventory, maintenance and disposal costs

Answer

TCO looks beyond price to every cost over the item's life cycle. The lowest-priced supplier is often not the lowest total cost once quality, delays, inventory and servicing are counted.

Question 2

A company has 45 days of inventory, 35 days of sales outstanding and 40 days of payables outstanding. What is its cash-to-cash cycle time?

Accepted Answer

40 days

Answer

Cash-to-cash cycle time = days of inventory + days sales outstanding − days payables outstanding = 45 + 35 − 40 = 40 days.

Question 3

Activity-based costing (ABC) differs from traditional costing because it:

Accepted Answer

Assigns overhead to products or customers based on the activities that drive cost

Answer

ABC traces overhead to activities, then to products or customers according to their consumption of those activities. This gives a more accurate view of the true cost to serve.

Question 4

A product has fixed costs of $100,000, a selling price of $50 per unit and a variable cost of $30 per unit. What is the break-even volume?

Accepted Answer

5,000 units

Answer

Break-even = fixed cost ÷ (price − variable cost) = 100,000 ÷ 20 = 5,000 units.

Question 5

In a reverse factoring (supply chain finance) program, how does the supplier benefit?

Accepted Answer

It receives early payment at a financing rate based on the buyer's stronger credit rating

Answer

In reverse factoring, a financier pays approved invoices early at a rate tied to the buyer's credit rating, which is usually lower than the supplier could get alone. The buyer can keep or extend its payment terms, which improves both parties' working capital.

Certified Supply Chain Professional CSCP Practice Practice Test

Certified Supply Chain Professional CSCP Practice Practice Test

Certified Supply Chain Professional CSCP Practice Supply Chain Financial Management and Cost Analysis