L3M3 Practice Exam Questions with Answers Contract Administration Certification

Explanation

When profitability is spoken of as a % the selling price, the profit element is called the margin.

Explanation

The calculation which needs to be done is one hundred thousand (dollars) divided by the contribu-tion per bottle. The contribution per bottle is one dollar minus the variable cost - 25 cents. Thus the contribution is 75 cents. One hundred thousand divided by $0.75 = 133,333. Note the answer is in units - in response to the QUESTION NO: of how many bottles / units must be sold to break even.

For people who feel they have difficulty with calculations, just look at the possible answers. If the contribution is a bit less than a dollar, and the fixed costs are 100,000, we would expect the answer to be a number a little over 100,000 - one of the answers fits the bill, and this is the correct answer. So the QUESTION NO: may look complicated or difficult, but if you stay calm and think it through, it's not that difficult.

Explanation

2011 is the correct answer.

You may wish to search for the Guiding Principles to familiarise yourself a little.

Explanation

The best quotation is selected, which would meet the specification as well as meeting the other re-quired criteria; and in order to progress things round the procurement cycle, a purchase order would be issued.

Explanation

This is about risk, and the answer is 'treat'.

Risk management strategies can be classified into 'the 4 T's', which you need to know for your ex-am.

Treating the risk is essentially seeking to minimise the likelihood or impact of the risk. An example might be to carefully monitor key suppliers' ongoing financial performance to minimise the likeli-hood of their going into liquidation during the course of a contract with us. Etc.

Explanation

Even if you don't know what 'Epistemological' means, you should know it's the odd one out.

It relates to the philosophical study of knowledge.

Explanation

These are 'model form' contracts. Industry standard templates eg NEC ('New Engineering Con-tract'); or FIDIC model form contracts. You will find some examples produced by CIPS on the CIPS website eg for IT procurements.

Explanation

Strengths.

Explanation

Essentially the contract is now between two different parties because one party has assigned the contract to someone else.

It's always a good idea to check whether this is permitted under a contract, otherwise you might finish up doing business with someone you didn't plan to do business with.

Explanation

Consideration is one of the essential elements of a contract in English law, and it essentially means the exchange of something of value for something else of value, typically goods or services for money.

Normally it is the price to be paid in exchange for goods or services.

Explanation

Both penetration pricing and promotional pricing begin with the market price. Marginal pricing and rate of return pricing both look at the costs of doing something, and base their calculations on cost. These last two are therefore cost-based approaches to pricing.

Explanation

A mini-competition may be held to select a supplier, depending on the wording in the framework arrangement documentation and circumstances at the time.

Explanation

An opportunity cost is the cost of not being able to do something else.

For example, if a firm opts to build a new factory, it may not be able to create ten new retail outlets which was another option open to it, in spending these particular funds. Or if you buy a holiday, you may not be able to buy a new television. The television is the opportunity cost of the holiday ie the benefit foregone.

The other types of cost shown are methods of classifying actual (real) costs. Opportunity costs are, in a sense, not real; they are hypothesized and therefore do not show in the balance sheet or profit and loss account of a business.

Explanation

'Is it acceptable, feasible and suitable?' are the tests.

Explanation

The items are complementary. Complements.

For example, a Tesla car and a Tesla charging point.

Explanation

Breakeven point. The firm breaks even: covers all of its fixed costs. At this point the firm has made neither a profit nor a loss, and hopefully is about to enter profitability.

Explanation

The Executive Summary summarises the situation for busy executives to save them working all the way through the detail.

The summary needs to be very well written, accurately reflective of the entire document, and in-clude the key points needed to make a balanced decision.

The executive summary should be written last of all the sections, and is often the only part of a document which will be read.

Explanation

Specification creep - where the requirement becomes more complex or sophisticated than originally thought necessary for the buying organisation's purposes. Naturally, this can be expected to increase cost to the buying organisation.

Explanation

The answer is an Ishikawa Diagram.

Can be used in addressing quality problems, problems of under-performance, etc.

The other Japanese-sounding names shown as possible answers are spurious - two are novelists, and Fukushima was a serious environmental radioactive leak at a nuclear power station on the coast of Japan.

Explanation

Term contracts are set up for a period of time, or a 'term'.

The other answer options shown here are the subject of other QUESTION NO: s within this test.

Explanation

Distributive: at the other end of the spectrum from 'collaborative'.

Explanation

Other customer data.

It would, I think, be very unusual for a contract manager to feel it appropriate to ask for information from a supplier representative about other customers. Business partners normally want their dealings to be private. However, in informal discussions, in the normal course of conversation, information is often transferred in a benign manner.