CIPS L4M7 Exam - Topic 10 Question 44 Discussion

Actual exam question for CIPS's L4M7 exam

Question #: 44
Topic #: 10

[All L4M7 Questions]

Which of the following purchases are most likely to have low acquisition costs? Select TWO that apply.

APurchase of ERP system

BPurchase of standard catalogued products

CStraight re-buy from a current supplier

DSpot purchase of a technically complexed machinery

EProcurement of construction projects

Show Suggested Answer

Suggested Answer: B, C

According to L4M7 study guide, acquisition costs in procurement are the costs associated with the activities involved in a purchase. A buying organisation incurs acquisition costs in low-value purchases as well as high-value purchases. The following purchases tend to have lower acquisition costs:

- Straight re-buy from a current supplier

- Purchase of standard catalogued products

Otherwise, any purchases of high value, high-risk items generally require greater attention of buying organisation and thus, they are likely to have higher acquisition costs. Spot purchase of a technically complexed machinery, Purchase of ERP system and Procurement of construction projects are examples of high-value, high-risk purchases.

LO 3, AC 3.1

by Marguerita at Sep 15, 2024, 11:22 AM

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Caprice

3 months ago

I thought D would be cheaper, but I guess not!

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Leatha

3 months ago

A is definitely not low cost, that's for sure.

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Lelia

3 months ago

Wait, how is C low cost? It can vary so much!

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Kiera

4 months ago

I agree, B and C make the most sense!

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Marcelle

4 months ago

Definitely B and C, those are usually cheaper.

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Iluminada

4 months ago

I recall that spot purchases can be risky and often expensive, especially for complex machinery.

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Jose

4 months ago

I feel like we had a practice question about ERP systems, and I think they usually have high acquisition costs, right?

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Thersa

4 months ago

I'm not entirely sure, but I think straight re-buys tend to have lower costs since they're from current suppliers.

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Kandis

5 months ago

I remember discussing how standard catalogued products usually have lower acquisition costs because they're mass-produced.

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Candida

5 months ago

I'm going to have to weigh the pros and cons of each option. The key is identifying the purchases that involve the least amount of complexity and customization, which would likely lead to lower acquisition costs.

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Kasandra

5 months ago

For low acquisition costs, I'd focus on purchases that are routine, standardized, and don't require a lot of customization or negotiation. B and C seem like the best bets here.

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Isadora

5 months ago

This seems straightforward. I'd say the purchases with the lowest acquisition costs are B and C - standard catalogued products and straight re-buys from current suppliers.

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Reita

5 months ago

Hmm, I'm not sure about this one. The options seem a bit tricky. I'll have to think it through carefully before selecting my answers.

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Ernestine

1 year ago

Haha, I'd love to see someone try to get a 'low acquisition cost' for a construction project! E) is definitely not the right answer. B) and C) are the way to go.

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Belen

1 year ago

Spot purchase of technically complex machinery would definitely have high costs.

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Jeanice

1 year ago

Yeah, I think standard catalogued products and straight re-buys are the best options for low acquisition costs.

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Ngoc

1 year ago

I agree, construction projects definitely have high acquisition costs.

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Paulina

1 year ago

I agree with Lawrence. B) and C) are the obvious choices here. D) for a technically complex machinery would definitely have higher acquisition costs.

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Steffanie

1 year ago

Spot purchase of a technically complex machinery is definitely expensive.

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Steffanie

1 year ago

I think E) procurement of construction projects would have high acquisition costs.

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Steffanie

1 year ago

I agree, B) and C) are definitely the most likely to have low acquisition costs.

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Mary

1 year ago

I disagree. I believe A and C have low acquisition costs because ERP systems and straight re-buys are more standardized and routine.

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Wendell

1 year ago

I think B and C have low acquisition costs.

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Carin

1 year ago

I agree with Wendell. Standard catalogued products and straight re-buy from a current supplier are usually cheaper.

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Lawrence

1 year ago

I think B) and C) are the most likely to have low acquisition costs. Purchasing standard catalogued products and straight re-buying from a current supplier tend to have fewer complexities and negotiations involved.

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Veronika

1 year ago

I think D) and E) would have higher acquisition costs due to their complexity.

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