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NEW QUESTION # 156
MNO Inc. is a U.S.-based manufacturing company that imports sub-assemblies from Asia and incorporates them into several products. The firm orders in large quantities to obtain the lowest price per unit, and then pulls the items as required to produce finished goods. MNO wishes to improve its cash flow and seeks ways to reduce the impact of import duties. Which of the following Is the BEST approach for the company to use?
- A. Obtain a temporary import bond
- B. Apply for duty refunds when goods are exported
- C. Place goods in a bonded warehouse and delay duty payment
- D. Review tariff classifications for potential savings opportunities
Answer: C
Explanation:
Placing goods in a bonded warehouse allows MNO Inc. to defer the payment of import duties until the goods are withdrawn for use. This can improve cash flow by delaying duty payments and reducing the immediate financial burden. Goods stored in a bonded warehouse are not subject to import duties until they are removed from the warehouse, which helps in managing cash flow more effectively.
References
NEW QUESTION # 157
A company reported income before taxes of $800,000 for Year 2. The company did not have temporary taxable differences at the end of Year 1 but reported a net deferred tax asset of $6,000 for Year 2. The effective income tax rate is 30 percent. What amount should the company pay as income tax for Year 2?
- A. $240,000
- B. $246,000
- C. $241,800
- D. $234,000
Answer: B
NEW QUESTION # 158
A buyer for ABC, Inc. meets with a sales representative from XYZ Company to discuss the purchase of a product. The sales representative provides documentation to the buyer that the product will meet or exceed the specifications required by ABC. Based on thi information, the buyer places an order with XYZ.
However, upon inspection of the received product, the buyer learns that it does not meet ABC's specifications and cannot be used for the intended purpose. Which of the following is TRUE in this situation?
- A. ABC can do nothing, as the salesperson's claim was an opinion and did not create a warranty.
- B. ABC should sell the product to a third party and use the funds to procure items that meet the required specifications.
- C. ABC should return the goods for a full refund because the promise made by the seller created an express warranty.
- D. ABC's design team should change the specifications to allow the product to be used and avoid further delay.
Answer: C
NEW QUESTION # 159
A supply manager concludes that the best source for a critical component is a manufacturer located in an overseas country. The supplier's pricing and reputation are excellent, but it is in an area that Is politically and economically unstable. The supply manager has no experience in this country, but needs to build a relationship with the supplier. Given this situation, which of the following will be MOST helpful in the long-term?
- A. A secure EDI system established with the overseas supplier
- B. The establishment of an international supply management office
- C. A clause in the contract stating that the buyer's language will serve as the lingua franca
- D. The employment of a trading agent to facilitate transactions
Answer: D
Explanation:
Given the political and economic instability of the supplier's location, employing a trading agent can be the most helpful long-term solution. A trading agent, with expertise in the local market and conditions, can navigate complexities, facilitate transactions, and manage risks associated with dealing in an unstable region.
This agent can provide on-the-ground support, ensure smoother communication, and help build a strong relationship with the supplier. References:
* "Global Supply Chain Management: Leveraging Processes, Measurements, and Tools for Strategic Corporate Advantage" by Matt Drake
* Articles on international trade and risk management in supply chain management journals
NEW QUESTION # 160
A supply manager is conducting financial analysis of bidders. The supply manager wants to select the supplier that is most efficient In the use of its assets. Based on the following information, which supplier should the supply manager choose?
- A. Supplier D: Netincome= 50, Assets = 20
- B. Supplier B: Netincome= 200,Assets= 100
- C. Supplier A: Netincome= 100,Assets= 10
- D. Supplier C: Netincome= 200,Assets= 400
Answer: C
Explanation:
To determine which supplier is most efficient in the use of its assets, we calculate the return on assets (ROA) for each supplier. ROA is calculated as:
ROA=Net IncomeAssets\text{ROA} = \frac{\text{Net Income}}{\text{Assets}}ROA=AssetsNet Income
* Supplier D: ROA = 50 / 20 = 2.5
* Supplier A: ROA = 100 / 10 = 10
* Supplier C: ROA = 200 / 400 = 0.5
* Supplier B: ROA = 200 / 100 = 2
Supplier A has the highest ROA at 10, indicating the highest efficiency in using its assets to generate income.
References:
* Financial analysis methods in supply chain management.
* Return on assets (ROA) calculation and interpretation.
NEW QUESTION # 161
Which of the following is the PRIMARY reason for holding a business review with a supplier?
- A. To review the supplier's cost performance relative to goals set for the year
- B. To strengthen the business relationship and to promote collaboration
- C. To ensure that senior executives from both companies meet on a recurring basis
- D. To determine whether the supplier should be moved to the strategic engagement tier
Answer: B
Explanation:
* Purpose of Business Review: Regular reviews are meant to foster collaboration, ensure alignment on goals, and address any issues proactively.
* Relationship Building: Strengthening the business relationship helps in fostering trust and long-term cooperation.
* Strategic Collaboration: By promoting collaboration, both parties can work together more effectively, potentially leading to innovation and continuous improvement.
References
* Monczka, R. M., Handfield, R. B., Giunipero, L. C., & Patterson, J. L. (2016). Purchasing and Supply Chain Management. Cengage Learning.
* Burt, D. N., Petcavage, S. D., & Pinkerton, R. L. (2010). Supply Management. McGraw-Hill Education.
NEW QUESTION # 162
Why would an entrepreneur want to operate a mobile food truck instead of a restaurant?
- A. In the short-run restaurants make zero economic profit.
- B. In the long-run restaurants make zero economic profit.
- C. A mobile food truck has lower fixed costs than a restaurant.
- D. A mobile food truck invites a wider variety of customers than a restaurant.
Answer: C
NEW QUESTION # 163
A firm buys a particular product that has low business impact and low supply market complexity. How would this product be categorized using the Kraljic classification model?
- A. Leverage
- B. Strategic
- C. Bottleneck
- D. Noncritical
Answer: D
NEW QUESTION # 164
Which of the following is MOST appropriate for review by an audit committee?
- A. Whether policy changes will optimize profits
- B. The existence of appropriate internal controls
- C. Forecasted sales and revenues
- D. Paperwork needed to remain compliant with regulations
Answer: B
NEW QUESTION # 165
A firm's primary goal for its upcoming raw material negotiations with a well-performing supplier is cost reduction. In order to achieve this, which of the following courses of action should supply management take?
- A. Offer to purchase a larger volume of material over the next five years
- B. Review the supplier's key performance indicators (KPIs)
- C. Inform the supplier where it is located on the Kraljic Matrix and request price concessions
- D. Research market conditions and the supplier's tolerance for early payment incentives
Answer: D
Explanation:
* Research Market Conditions: Understanding current market conditions helps in assessing whether the supplier's prices are competitive and reasonable.
* Supplier's Financial Situation: Knowing the supplier's financial health and their tolerance for early payment incentives can be crucial in negotiations.
* Negotiate Incentives: Offering early payment incentives can be an effective strategy to negotiate cost reductions. This benefits the supplier by improving their cash flow.
* Evaluate Alternatives: Consideration of alternative suppliers or negotiating other terms can also put pressure on the supplier to offer better pricing.
References:
* CIPS: "Negotiation Techniques in Procurement and Supply"
* ISM: "Supplier Negotiation Strategies"
NEW QUESTION # 166
A firm has over 1000 active suppliers within its database. The company wants to begin the practice of regular business reviews with suppliers. Of the following, the BEST method for conducting reviews is to
- A. choose suppliers based on the necessity of their product to operations
- B. choose one supplier from each category of products purchased
- C. start with the closest suppliers and conclude with those farthest away
- D. start with the most tenured suppliers and conclude with the newest
Answer: A
NEW QUESTION # 167
Which of the following situations is an example of materiality in accounting?
- A. Company A wants to purchase $100,000 worth of fabric to use in its upholstery business. However, the supplier will not grant credit for a purchase that large, so Company A reduces the order to $20,000.
- B. Company A receives an order from its largest customer, but it is a relatively small order. Company A does not make any entry into the accounts at the time it receives the order.
- C. Company A initiates a relatively small new advertising campaign. Company A decides to include these costs as part of selling, general, and administrative expenses on the income statement rather than disclose them separately.
- D. Company A owns land that it purchased for $100,000 twenty years ago. The land is now appraised at $250,000, but Company A does not adjust the value of the land in its accounts.
Answer: C
NEW QUESTION # 168
When developing a sourcing strategy, which of the following is the BEST source of data on the spend profile of a category?
- A. A sales representative from the supplier
- B. An internal stakeholder
- C. Information from an internal database
- D. The Internet
Answer: C
Explanation:
* Spend Profile Analysis: This involves examining how much money is being spent, on what, and with whom.
* Internal Database: The company's internal database will have historical data on past expenditures, contracts, purchase orders, and supplier performance.
* Comprehensive Data: This data is likely to be accurate, detailed, and tailored to the company's specific context.
* Internal Stakeholders: While they can provide insights, their information may not be as comprehensive or reliable as the data from an internal database.
* External Sources: External sources like sales representatives or the internet may not have access to all necessary internal details. References
* CIPS (Chartered Institute of Procurement & Supply) guidelines on spend analysis.
NEW QUESTION # 169 
The partial regression output table below describes the relationship between point differential per game and winning percentage for all 30 National Basketball Association teams for the last five seasons. (For a team, the point differential per game is the difference between average points scored and average points allowed per game.) Based on this information, a decrease in point differential of one point per game would have what effect, on average, on a team's winning percentage?
- A. A decrease in winning percentage of 0.03
- B. An increase in winning percentage of 0.03
- C. An increase in winning percentage of 0.50
- D. A decrease in winning percentage of 0.50
Answer: A
NEW QUESTION # 170
A company is considering a project to develop a nascent technology to harness energy from ocean waves but wants to determine its economic viability. This 10-year project will cost the company $10 million in research and development costs and $25 million to build infrastructure. Each megawatt of energy costs $60 to produce, but the government offers a subsidy of $5 permegawatt. The price per megawatt of energy will be $56 for the next five years, and the company expects to produce 1 million megawatts per year. Ignoring the time value of money (i.e. assuming cash flows across different years are directly comparable), if costs, output, and subsidies remain constant, what will the market price of a megawatt of energy need to be in years six through ten to make this project economically viable?
- A. $61
- B. $59
- C. $71
- D. $56
Answer: A
NEW QUESTION # 171
EFG uses specialized components from Supplier A in the manufacture of state-of-the-art testing equipment.
Supplier A has been very successful in meeting EFG's stringent quality specifications, which has been critical for EFG.
EFG learns that Supplier A plans to acquire a smaller firm which makes components similar to those under contract with EFG. EFG is concerned that the supplier may transfer its contract to the new subsidiary, leading to compromises in quality. Given this situation, which of the following is the BEST course of action for EFG to take?
- A. Take no action, as Supplier A must supply the chips at the same quality level no matter who manufactures them
- B. Negotiate with Supplier A to strengthen the indemnification clause in the contract
- C. Negotiate with Supplier A to add a consent of assignment clause to the contract
- D. Negotiate with Supplier A to remove the changes clause from the contract
Answer: C
Explanation:
* Understand the Acquisition Impact: Recognize the potential risks associated with Supplier A acquiring a smaller firm and possibly transferring contracts.
* Protect Quality Standards: Ensuring that EFG's stringent quality requirements are met is crucial.
* Consent of Assignment Clause: Adding this clause ensures that Supplier A cannot transfer the contract to another entity without EFG's consent, maintaining control over the quality.
* Negotiate Terms: Discuss and agree upon the specifics of this clause with Supplier A to safeguard EFG's interests.
References
* Monczka, R. M., Handfield, R. B., Giunipero, L. C., & Patterson, J. L. (2016). Purchasing and Supply Chain Management. Cengage Learning.
* Gattorna, J. (2015). Dynamic Supply Chains: Delivering Value Through People. Pearson.
NEW QUESTION # 172 
The data below represent the top 25 U.S. newspapers by average daily circulation (in thousands) in 2013. Based on the output, what is the standard deviation of this sample?
- A. 299,663.81
- B. 547.42
- C. 109.48
- D. 10.46
Answer: B
NEW QUESTION # 173
A company reported pretax financial statement income of $420,000 for Year 1. Taxable income for Year 1 was $300,000 due to a temporary timing difference in depreciation expenses. The income tax rate is 30 percent. In its Year 1 balance sheet, the company should record a deferred tax:
- A. liability of $36,000
- B. asset of $36,000
- C. asset of $120,000
- D. liability of $120,000
Answer: A
NEW QUESTION # 174
Which of the following is the BEST course of action to take in order to develop a positive working relationship with a supplier?
- A. Invite engineering and production to meet with the supplier
- B. Involve upper management in discussions with the supplier
- C. Work with the supplier one-on-one to develop a personal relationship
- D. Involve Internal customers in team discussions with the supplier
Answer: D
Explanation:
* Developing Positive Relationships: Establishing a good working relationship with a supplier is crucial for successful procurement.
* Involving Internal Customers: Bringing internal customers into discussions ensures that all stakeholders' needs and perspectives are considered.
* Building Trust: This approach fosters transparency, collaboration, and mutual understanding, strengthening the supplier relationship.
* Comprehensive Communication: It ensures that the supplier receives consistent and unified feedback from the buying organization.
References
* ISM. (n.d.). Strategies for Building Supplier Relationships.
* CIPS. (n.d.). Engaging Internal Stakeholders in Supplier Discussions.
NEW QUESTION # 175
A supply manager is leading a negotiation team. This team will negotiate with several finalists supplying complex services. Prior to the negotiations, the supply manager briefs the team on strategies, roles and responsibilities. The team members seem to understand the importance of these factors, but shortly after the negotiations commence, several members begin to make mistakes such as arguing witF each other and failing to pay attention. Which of the following is the BEST course of action for the supply manager to take at this point?
- A. Contact the team members' supervisors and express concern over the way they acted during the negotiations
- B. End the negotiations and begin another round with different team members
- C. Remove the offending stakeholders from the negotiations, as they are not following the instructions
- D. Call a caucus and reiterate the negotiation rules and their Importance In interactions with suppliers
Answer: D
Explanation:
* Issue During Negotiations: Team members are making mistakes and not following instructions shortly after negotiations commence.
* Immediate Action: Calling a caucus allows the supply manager to pause the negotiations and address the issues immediately.
* Reiterate Rules: Reiterating the negotiation rules and their importance helps in realigning the team and ensuring everyone understands their roles and responsibilities.
* Preventing Further Issues: This approach aims to correct the team's behavior and improve the chances of successful negotiations without removing stakeholders or ending the negotiations prematurely.
References
* ISM. (n.d.). Best Practices for Leading Negotiation Teams.
* CIPS. (n.d.). Effective Negotiation Strategies and Techniques.
NEW QUESTION # 176
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