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L4M2 Prep Training - L4M2 Study Guide & L4M2 Test Pdf

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The Chartered Institute of Procurement and Supply (CIPS) is a globally recognized professional body that offers procurement and supply chain management qualifications. One of their most popular courses is the CIPS Level 4 Diploma in Procurement and Supply. This qualification is designed for individuals who are looking to advance their career in procurement or supply chain management.

The Chartered Institute of Procurement and Supply (CIPS) is a leading professional body for procurement and supply chain professionals worldwide. CIPS offers a range of certification programs that cater to the diverse needs of procurement and supply chain professionals. One such program is the CIPS Level 4 Diploma in Procurement and Supply. Defining Business Needs certification comprises eight modules that cover the core competencies required for professionals working in procurement and supply chain management. The second module of this diploma program is Defining Business Needs, also known as L4M2.

CIPS L4M2 (Defining Business Needs) exam is an essential certification for procurement professionals who want to develop their skills in identifying and defining the needs of their organization. L4M2 exam is designed to help professionals understand the importance of defining business needs and how to effectively gather and analyze data to develop appropriate strategies that meet those needs.

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CIPS Defining Business Needs Sample Questions (Q134-Q139):

NEW QUESTION # 134
Which of the following are considered as direct costs in a construction company? Select TWO op-tions

A. The materials and supplies needed for the company's day-to-day operations.
B. An employee is hired to work on a project, either exclusively or for an assigned number of hours
C. Clerical assistants who maintain the office
D. Advertising and marketing communication
E. Raw materials

Answer: B,E

Explanation:
Direct costs are directly associated with the production of a good or service. In this question, 'An employee is hired to work on a project, either exclusively or for an assigned number of hours' and 'Raw materials' are directly related to producing the product.
Indirect costs are the general costs of the organisation - these costs cannot easily be attributed to specific products or services (also known as overheads). 'The materials and supplies needed for the company's day-to- day operations' or 'Clerical assistants who maintain the office' or 'Advertising and marketing communication' is example of indirect cost.

NEW QUESTION # 135
Which of these causes variances in budgets?
* Quantity discounts
* Substitute goods
* Loan repayments
* Corporation tax

A. 2 and 3 only
B. 1 and 4 only
C. 1 and 2 only
D. 2 and 4 only

Answer: C

Explanation:
Detailed Explanation:
* Quantity discounts: Changes in order quantities can lead to cost savings, impacting budget forecasts.
* Substitute goods: Using alternative products can alter planned expenses, causing budget deviations.
Loan repayments and taxes are fixed financial obligations and do not directly impact procurement budgeting. Reference: CIPS Level 4, Cost Management.

NEW QUESTION # 136
Which of the following can cause overhead variance? Select TWO that apply:

A. Decrease in production volume
B. Spike in monthly leasing fee
C. Decreasing packaging costs
D. Spike in material price
E. Rising production worker's wage rate per hour

Answer: A,B

Explanation:
Overhead variances arise when the actual overhead costs incurred differ from the expected amounts. Managers want to understand the reasons for these differences, and so should consider computing one or more of the overhead variances described below. Each of these variances applies to a different aspect of overhead expenditures. It is not necessary to calculate these variances when a manager cannot influence their outcome.
Fixed Overhead Spending Variance
The fixed overhead spending variance is the difference between the actual fixed overhead expense incurred and the budgeted fixed overhead expense. An unfavorable variance means that actual fixed overhead expenses were greater than anticipated. The formula for this variance is:
Actual fixed overhead - Budgeted fixed overhead = Fixed overhead spending variance The amount of expense related to fixed overhead should (as the name implies) be relatively fixed, and so the fixed overhead spending variance should not theoretically vary much from the budget.
Fixed Overhead Volume Variance
The fixed overhead volume variance is the difference between the amount of fixed overhead actually applied to produced goods based on production volume, and the amount that was budgeted to be applied to produced goods. For example, a company budgets for the allocation of $25,000 of fixed overhead costs to produced goods at the rate of $50 per unit produced, with the expectation that 500 units will be produced. However, the actual number of units produced is 600, so a total of $30,000 of fixed overhead costs are allocated. This creates a fixed overhead volume variance of $5,000.
Variable Overhead Efficiency Variance
The variable overhead efficiency variance is the difference between the actual and budgeted hours worked, which are then applied to the standard variable overhead rate per hour. The formula is:
Standard overhead rate x (Actual hours - Standard hours)
= Variable overhead efficiency variance
A favorable variance means that the actual hours worked were less than the budgeted hours, resulting in the application of the standard overhead rate across fewer hours, resulting in less expense being incurred. However, a favorable variance does not necessarily mean that a company has incurred less actual overhead, it simply means that there was an improvement in the allocation base what was used to apply overhead.
Variable Overhead Spending Variance
The variable overhead spending variance is the difference between the actual and budgeted rates of spending on variable overhead. The variance is used to focus attention on those overhead costs that vary from expectations. The formula is:
Actual hours worked x (Actual overhead rate - standard overhead rate)
= Variable overhead spending variance
A favorable variance means that the actual variable overhead expenses incurred per labor hour were less than expected.
In the study guide, CIPS splits overhead variance into volume and expenditure variance. They can be understood as variable and fixed overhead variance respectively.
Reference:
- CIPS study guide page 59
- What are overhead variances? - AccountingTools
LO 1, AC 1.4

NEW QUESTION # 137
Synergy Ltd is a fast-growing tool and hardware retailer. The company's customer services team has been using Excel worksheets to manage customer relationships. When the company is expend-ing its market presence, this way of working leads to poorer customer services as the database is scattered around in spreadsheet, leading to patchy and inconsistent conversations with customers. The company decides to purchase a CRM system. What requirement should Synergy's procurement team take into account in the specification for CRM system?

A. The ability to import bulk data from Excel spreadsheets
B. The relative size of the potential suppliers to Synergy
C. Total number of the supplier's employees
D. The form and reference number of the purchase order

Answer: A

Explanation:
The purpose of this Question:
to actionable requirements before communicating with the suppliers. The scenario suggests that Synergy Ltd's customer services team is using Excel spreadsheets, they lack a centralised customer database. This leads to problems in communications with customers.
A CRM system can solve the communication problem. But a Question: 100
will the previous data be imported? If the CRM system can support bulk import from Excel tables, it will save a lot of time.
Reference:
LO 1, AC 1.1

NEW QUESTION # 138
A buyer in Housing Authority is considering using performance specification in upcoming social housing project. What should buyer be aware when using this type of specification?

A. The buyer must be able to clearly define the performance metrics to ensure that the of-fered solution will achieve the desired outcome
B. Using performance specification means that the buyer will bear all the risks regarding the fitness for purpose of the facility.
C. The buyer must be able to define the materials to be used, the execution and installation methods required and the specific design of the building
D. In performance specification, specific brands and preferred suppliers must be appointed to avoid the competition

Answer: A

Explanation:
In construction, specifications are written documents that describe the materials and workmanship required for a development. They do not include cost, quantity or drawn information but need to be read alongside other contract documentation such as quantities, schedules and drawings.
Specifications vary considerably depending on the stage to which the design has been developed, ranging from performance (open) specifications that require further design by a contractor or sup-plier, to prescriptive (closed) specifications where the design is already complete when the project is tendered.
Prescriptive specifications give the client more certainty about the end product when they make their final investment decision (i.e. when they appoint the contractor), whereas a performance specification gives the contractor and suppliers more scope to innovate and adopt cost effective methods of work, potentially offering better value for money.
Typically, performance specifications are written on projects that are straight-forward, standard building types, whereas prescriptive specifications are written for more complex buildings, or buildings where the client has requirements that might not be familiar to contractors and where certainty regarding the exact nature of the completed development is more important to the client.
Performance specification has some disadvantages:
- Well-defined performance metrics are needed to ensure that the specified performance will achieve the desired outcome
- Require reliable, practical, economical tests of performance
- Evaluations are subjective and require additional time and effort to complete Therefore, if a performance specification is used, the buying organisation will have to ensure that they are able to define and conduct tests on whether supplier's solution can deliver the desired out-come.
Reference:
- CIPS study guide page 118-121
- Performance specification - Designing Buildings Wiki
- Partnership for Public Procurement (cips.org)
LO 3, AC 3.1

NEW QUESTION # 139
......

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