Question 1

A consulting firm in London had previously had static budgets. They were set once and locked in for the year. This resulted in departments meeting their budgets early and doing virtually nothing the rest of the year. To address this imbalance, the company tossed out the static budget and developed a budget for each of the next 18 months. And each month, real sales figures are analyzed against the budget and the budget is adjusted. Then the company adds another month into the budgeting plan. What type of budget this company is using?

Options :

A : Incremental budget

B :

Zero-based budget

C : Rolling budget

D : Activity-based budget

Answer: C

Question 2

Which of the following is a risk to buying organization when using conformance specification?

Options :

A : Product failure

B : Inputs are uncontrollable

C : Ambiguous specification

D : Liquidity

Answer: A

Question 3

Which of the following specific markets is most likely to require enormous investment in machineries and access to skilled workforce?

Options :

A : Agriculture

B : Construction

C : Retail

D : Manufacturing

E : Finance

Answer: D

Question 4

How can a procurement department meet the business needs when purchasing leverage items?

Options :

A : Developing long-term relationships such as partnerships

B : Developing efficient order processes such as e-procurement

C : Developing effective contracts such as call-off contracts

D : Developing buying power such as competitive tendering

Answer: D

Question 5

Buyers in the same industry with the same understanding of relative value and price may still make different decisions about whether to switch. Which of the following factors may prompt a buying organization to incline toward substitute products?

1. There is potential for backward integration

2. Access to financial resources

3. The switching cost is high

4. The substitute fits organisation's strategy

Options :

A : 1 and 4 only

B : 3 and 4 only

C : 1 and 2 only

D : 2 and 4 only

E :

Answer: D

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