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CIPS L4M2 Questions and Answers verified 100% Correc
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CIPS L4M2 Questions andAnswers verified 100% Correct
Profit - ✔✔The difference between the selling price of a product and the cost of
producing the product.
Cash flow forecast - ✔✔Is designed to identify the sources and amounts of cash
inflows, and the destinations and amount of cash outflows, over a given budgetary period.
Cash flow projection - ✔✔Designed to project the future cash position of the firm
or project.
Cash flow management - ✔✔Ensuring that we time incoming and outgoing cash flows.
Business case - ✔✔Is the justification for undertaking an action and its purpose is to
seek approval and finance for the recommended action.
Companies will use a substitute product/service if the economics of doing so are
favourable. This depends on 3 things: - ✔✔The relationship between the value the org
gets from the product and it's price, how costly the change would be, and the inclination of
the buyer to make a change.
Line of best fit - ✔✔The line that goes approx. through the middle of the data points with
an equal number of data points above and below it.
,Open-ended problems - ✔✔When something is stopping the achievement of an objective
or blocking progress e.g. agreement from senior management is required before
progressing.
Closed problems - ✔✔These appear when something happens that should not
have happened e.g. price of raw materials suddenly increase.
Primary market data - ✔✔Is collected for a specific purpose, direct from relevant
sources e.g. customers. This data is tailor made and is considered direct and a reliable
source. However it is timely, costly and possibly considered biased.
Requests for information - ✔✔If further detail/analysis is required to establish a full list
of requirements. This can be requested from suppliers.
Secondary data - ✔✔Data that has already been gathered and assembled for other
purposes e.g trade publications. This data is readily available and is certified as a
recognised source. This is also considered 'desk research'. Further examples, markets
reports, official statistics, internet.
Direct costs - ✔✔Costs directly associated with the production of a service or good.
Indirect costs - ✔✔General running costs that cannot easily be attributed to specific
products (also known as overheads). Expenditure on labour, materials and other items.
Fixed costs - ✔✔Costs that do not vary irrespective of the volume of activity in a
business e.g. salaries of permanent staff.
Variable costs - ✔✔A cost that varies with the level of output of an organisation.
Semi-variable costs - ✔✔A cost made up of both fixed and variable costs.
, Budgets - ✔✔Budgets plan quantified in monetary terms and are important for time
phased income and expenditure management, to understand incoming and outgoing
cash flow over a specified period.
Fixed budget - ✔✔These are budgets that's are fixed and have to be operated within.
Flexible budget - ✔✔These are budgets which move with business needs and change
in line as the volume output changes.
Variance to budget reasons - ✔✔Costs of materials changing
Fluctuation in exchange rates
Increase or decline in sales versus forecast
Economies of scale
Break-even analysis - ✔✔Calculates the point in a business where revenue equals total
costs. There is a point where the sales line and total cost line cross over. Understanding
this point can be useful in negotiations.
Purchase cost analysis (PCA) - ✔✔A tool used to analyse the costs of things bought so
that strategies can be developed for reducing costs and at the same time improve supplier
relationships. The analysis of the cost of individual materials, components and activities that
make up a purchases item.
Benchmarking - ✔✔A strategic analysis process of continuously measuring an organisations
products, services and practices against a recognised leader in the studied area.
A result of benchmarking - ✔✔Enables pegs to learn from success and failures of other
business and allow you to build competitive advantage and understanding of the bigger
picture with their business or industry.
Benchmarking process - ✔✔Planning, analysis, integration, action, maturity.
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