CIPS L4M2 Exam - Topic 4 Question 52 Discussion

Actual exam question for CIPS's L4M2 exam

Question #: 52
Topic #: 4

A garment manufacturer supplies global retailers with t-shirts, shirts, and linen trousers. Because of currency fluctuations, the manufacturer is aware that they must control their direct costs in order to ensure profits. Which of the following is a direct cost for the garment manufacturer?

AFacilities rent

BCotton fabric

CUtilities cost

DOffice staff payroll

Show Suggested Answer

Suggested Answer: B

Cotton fabric is a direct cost because it is directly attributable to the production of the garments. Costs like rent, utilities, and payroll are indirect costs associated with running the business. Reference: CIPS Level 4, Cost Categorization in Procurement.

by Jesse at Jan 12, 2025, 05:29 PM

Limited Time Offer

25%

Off

Get Premium L4M2 Questions as Interactive Web-Based Practice Test or PDF

Contribute your Thoughts:

Submit Cancel

Zena

6 months ago

Totally agree, cotton fabric is essential for production.

upvoted 0 times

...

Shawna

6 months ago

Surprised office staff payroll isn't a direct cost!

upvoted 0 times

...

Rosenda

6 months ago

Facilities rent? Not really a direct cost.

upvoted 0 times

...

Starr

7 months ago

I think utilities cost should count too.

upvoted 0 times

...

Flo

7 months ago

Cotton fabric is definitely a direct cost!

upvoted 0 times

...

Phung

7 months ago

Facilities rent seems like it could be a direct cost, but I feel like it's more of an overhead expense. I'm confused about that one.

upvoted 0 times

...

Mammie

7 months ago

I practiced a similar question where we had to identify direct costs, and I remember that materials like fabric are usually considered direct costs.

upvoted 0 times

...

Luisa

7 months ago

I'm not entirely sure, but I remember something about utilities being more of an indirect cost since they support the overall operation.

upvoted 0 times

...

Alaine

8 months ago

I think direct costs are those that can be directly attributed to the production of goods, so I'm leaning towards cotton fabric.

upvoted 0 times

...

Hannah

8 months ago

Facilities rent and utilities are overhead costs, not directly tied to production. Office staff payroll is also an indirect cost. I think the cotton fabric is the direct cost here.

upvoted 0 times

...

Adria

8 months ago

Okay, I've got this. The direct costs for a garment manufacturer would be the materials used to make the products, like the cotton fabric. I'll select that option.

upvoted 0 times

...

Denise

8 months ago

Hmm, I'm a bit unsure about this one. I need to review my notes on the difference between direct and indirect costs.

upvoted 0 times

...

Carissa

8 months ago

This seems like a straightforward question about direct costs. I'll think through the options carefully.

upvoted 0 times

...

Francesco

1 year ago

I'm not sure about the others, but I think cotton fabric makes sense as a direct cost.

upvoted 0 times

...

Alona

1 year ago

B. Cotton fabric. Easy peasy. I'm not even going to bother with the other options. That's the only one that makes sense for a garment manufacturer.

upvoted 0 times

Karma

1 year ago

B: Agreed, it's the most obvious choice.

upvoted 0 times

...

Rosendo

1 year ago

A: Definitely B. Cotton fabric is a direct cost for a garment manufacturer.

upvoted 0 times

...

Susy

1 year ago

I agree with Cheryll. Cotton fabric is definitely a direct cost for the manufacturer.

upvoted 0 times

...

Cheryll

1 year ago

I think cotton fabric is a direct cost because it's directly used in making the garments.

upvoted 0 times

...

Glenn

1 year ago

I'm going with B. Cotton fabric. It's the core material used in the production of the garments, so it has to be a direct cost.

upvoted 0 times

Jacqueline

1 year ago

A: Exactly, it's a crucial component in their production process.

upvoted 0 times

...

Shawnee

1 year ago

B: Yeah, without the cotton fabric, they wouldn't be able to produce any garments.

upvoted 0 times

...

Golda

1 year ago

A: I agree, B) Cotton fabric is definitely a direct cost for the manufacturer.

upvoted 0 times

...

Aracelis

1 year ago

Haha, office staff payroll? That's definitely an indirect cost. I mean, unless the office staff are sewing the shirts themselves, it's not a direct cost.

upvoted 0 times

...

Starr

1 year ago

I agree with Tamesha. The question is specifically asking about direct costs, and cotton fabric is a clear direct cost for a garment manufacturer.

upvoted 0 times

Bettye

1 year ago

D: So, controlling the cost of cotton fabric is crucial for their profits.

upvoted 0 times

...

Rosalyn

1 year ago

C: It makes sense, since the manufacturer needs the fabric to make the garments.

upvoted 0 times

...

Lovetta

1 year ago

B: Definitely, cotton fabric is a direct cost for a garment manufacturer.

upvoted 0 times

...

Deja

1 year ago

A: B) Cotton fabric

upvoted 0 times

...

Tamesha

1 year ago

Definitely B. Cotton fabric is a direct cost in the manufacturing of garments. It's the raw material used to make the t-shirts, shirts, and linen trousers.

upvoted 0 times