CVPM Inventory and Cost Control 2

Question 1

A veterinary practice's cost of goods sold (COGS) is $180,000 and net revenue is $450,000. What is the COGS percentage?

Accepted Answer

40%

Answer

COGS percentage = ($180,000 / $450,000) × 100 = 40%.

Question 2

Which inventory valuation method assumes that the most recently purchased items are sold first?

Accepted Answer

LIFO

Answer

LIFO (Last In, First Out) assumes the most recently purchased items are the first to be sold.

Question 3

What is the primary purpose of an ABC inventory analysis in a veterinary practice?

Accepted Answer

Categorize inventory by value to prioritize management effort

Answer

ABC analysis categorizes inventory into A (high-value), B (moderate), and C (low-value) items to focus management effort where it matters most.

Question 4

A drug has a unit cost of $12 and the practice applies a standard markup of 100%. What is the dispensing fee if the final client charge is $30?

Accepted Answer

$6

Answer

100% markup on $12 gives a selling price of $24; a $30 charge means the dispensing fee is $30 − $24 = $6.

Question 5

Which term describes the minimum quantity of an item that should be on hand before a reorder is triggered?

Accepted Answer

Reorder point

Answer

The reorder point is the inventory level at which a new purchase order should be placed to avoid stockouts.

(CVPM) Certified Veterinary Practice Manager Practice Test