CLTD Logistics Costing and Finance 2

Question 1

Which financial metric measures how efficiently a company uses its assets to generate logistics-related revenue or cost savings?

Accepted Answer

Return on assets (ROA)

Answer

Return on assets (ROA) indicates how effectively logistics assets (fleet, warehouses, equipment) generate returns, making it a key metric for logistics investment decisions.

Question 2

What is the difference between a 'Class Rate' and a 'Contract Rate' in freight pricing?

Accepted Answer

Class rates are published tariff-based rates tied to commodity classification; contract rates are individually negotiated between shipper and carrier

Answer

Class rates are standardized tariff rates based on the NMFC freight class of a commodity; contract rates are privately negotiated between a shipper and carrier, often offering lower prices for volume commitments.

Question 3

A company's logistics cost as a percentage of sales is 8%. If annual sales are $50 million, what are the total logistics costs?

Accepted Answer

$4,000,000

Answer

Total logistics costs = 8% × $50,000,000 = $4,000,000.

Question 4

Which concept describes the trade-off where reducing inventory carrying costs may increase transportation costs due to more frequent smaller shipments?

Accepted Answer

Cost trade-off analysis

Answer

Cost trade-off analysis recognizes that minimizing one logistics cost element (e.g., inventory) often increases another (e.g., transport), requiring a total-cost perspective to find the optimal balance.

Question 5

When evaluating a make-or-buy decision for logistics services (e.g., outsourcing warehousing), which cost type is most critical to identify?

Accepted Answer

Opportunity costs and total incremental costs

Answer

Make-or-buy decisions should focus on opportunity costs and incremental (avoidable) costs rather than sunk or historical costs, to ensure the decision reflects true economic impact.

CLTD - Certified in Logistics, Transportation and Distribution Practice Test

CLTD - Certified in Logistics, Transportation and Distribution Practice Test

CLTD Logistics Costing and Finance 2