Latest Valid L4M5 Test Guide offer you accurate Premium Files | Commercial Negotiation
Latest Valid L4M5 Test Guide offer you accurate Premium Files | Commercial Negotiation
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CIPS Commercial Negotiation Sample Questions (Q121-Q126):
NEW QUESTION # 121
Which of the following is a description of mark-up?
- A. Profit expressed as a percentage of fixed costs
- B. Profit expressed as a percentage of costs
- C. Profit expressed as a percentage of the selling price
- D. Profit expressed as a percentage of variable costs
Answer: B
Explanation:
Mark-up is defined as profit expressed as a percentage of the cost. It calculates the profit margin based on the cost price rather than the selling price, which allows companies to determine how much they are earning over their production or purchase costs. This aligns with standard accounting and CIPS definitions of mark-up in procurement contexts.
NEW QUESTION # 122
Which of the following is the best description of direct cost?
- A. Direct costs include raw materials, labour and other expenses attributable to the final product
- B. Direct costs are only variable raw materials that constitute a product
- C. Direct costs include only raw materials and labour of making the final product
- D. Direct costs include raw materials, labour and overheads
Answer: A
Explanation:
:
Direct costs are those costs of a product/service directly attributable/traceable to its production, for example, the costs of labour and materials directly used to produce the goods/services which the organisation sells.
NEW QUESTION # 123
Which of the following would cause a demand curve for a good to be price inelastic?
- A. The luxury goods
- B. The consultancy service
- C. There are a great number of substitutes for the good
- D. The necessary goods
Answer: D
Explanation:
Essential goods and services such as electricity, fuel, basic food stuffs, commuter transport and habitual products such as tobacco, alcohol and sugar-based drinks are often sited as facing a relatively inelastic demand curve. This means when the price goes up, the quantity demanded does not decrease very much and so they are often the target of government taxation.
LO2, AC 2.2
NEW QUESTION # 124
In a commercial negotiation, a procurement professional negotiates on his company's behalf. The power of buying organisation is the only factor that influences the behaviours of the other party. Is this assumption true?
- A. No, because power of supplier is the only factor that influences the other party
- B. Yes, because the outcomes of negotiation are attributable to the buying organisation
- C. No, because personal power of negotiators also attributes to the outcomes
- D. Yes, because buyer's brand, reputation and purchasing spend largely determine the outcomes
Answer: C
Explanation:
:
The assumption is false, because when a procurement professional negotiates on behalf of his employer, he brings the power of his organisation (its brand, reputation and purchasing spend) as well his own personal power (that which is embedded within him) to the negotiation.
From a negotiation perspective, both organisational and personal power have the ability to influence the behaviours of other or the cause of event. This power is clearly core to negotiation, and of enormous important in seeking to achieve the objectives.
NEW QUESTION # 125
Procurement gets involved in negotiating purchase requisitions only when there is a value analysis to ensure that only value-adding aspects are included. Is this statement true?
- A. No, purchasing can negotiate other details of the purchase requisition even where value analysis is absent
- B. Yes, value analysis is the single most important responsibility of procurement in the processing of repeat requisitions
- C. No, value analysis is a very technical process that requires the expertise of engineering and financial analysts
- D. Yes, the role of purchasing is to add value to the purchase, and therefore every purchase requisition must go through a team value analysis
Answer: A
Explanation:
Procurement can negotiate various aspects of a purchase requisition even without a formal value analysis.
While value analysis can enhance cost-effectiveness, procurement professionals often negotiate on pricing, terms, and conditions to add value independently of value analysis, as per CIPS's guidelines on procurement flexibility in negotiations.
NEW QUESTION # 126
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