CVPM Inventory and Cost Control 5

Question 1

A practice manager reviews a product with a 6-week lead time and sells 30 units per week. What is the lead time demand?

Accepted Answer

180 units

Answer

Lead time demand = 30 units/week × 6 weeks = 180 units.

Question 2

Which financial metric best indicates whether a practice's product pricing is covering direct product costs?

Accepted Answer

Gross profit margin

Answer

Gross profit margin measures revenue minus COGS as a percentage of revenue, directly reflecting whether product pricing covers direct costs.

Question 3

A practice manager notices frequent back-ordering of a specific antibiotic. What is the most effective long-term solution?

Accepted Answer

Increase the reorder point and establish a secondary supplier

Answer

Raising the reorder point and qualifying a backup supplier addresses both timing and supply-chain risk for a frequently back-ordered item.

Question 4

Under DEA regulations, how long must a veterinary practice retain Schedule II controlled substance records?

Accepted Answer

2 years

Answer

DEA regulations require that Schedule II controlled substance records be maintained for a minimum of two years.

Question 5

A practice's average payment terms with suppliers are net 45 days, but its average collection time from clients is 15 days. What does this imply for cash flow?

Accepted Answer

The practice enjoys a favorable cash flow position since clients pay well before payables are due

Answer

Collecting from clients in 15 days while paying suppliers in 45 days means the practice holds cash for 30 days, a favorable working capital position.

(CVPM) Certified Veterinary Practice Manager Practice Test

(CVPM) Certified Veterinary Practice Manager Practice Test

CVPM Inventory and Cost Control 5