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Free PDF Quiz 2025 CIPS Marvelous L4M2: Defining Business Needs Exam Sample Online

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The L4M2 certification exam is a crucial step in the career development of procurement and supply chain professionals. L4M2 exam covers a wide range of topics, including stakeholder management, market analysis, and supply chain mapping. By passing L4M2 Exam, candidates can demonstrate their ability to effectively identify and define business needs, which is a critical skill in any procurement or supply chain role.

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The study material to get CIPS Defining Business Needs certified should be according to individual's learning style and experience. Real CIPS L4M2 Exam Questions certification makes you more dedicated and professional as it will provide you complete information required to work within a professional working environment.

CIPS Defining Business Needs Sample Questions (Q103-Q108):

NEW QUESTION # 103
Which of the following are considered as direct costs in a construction company? Select TWO op-tions

A. Clerical assistants who maintain the office
B. The materials and supplies needed for the company's day-to-day operations.
C. Raw materials
D. Advertising and marketing communication
E. An employee is hired to work on a project, either exclusively or for an assigned number of hours

Answer: C,E

Explanation:
Direct costs are directly associated with the production of a good or service. In this question, 'An employee is hired to work on a project, either exclusively or for an assigned number of hours' and 'Raw materials' are directly related to producing the product.
Indirect costs are the general costs of the organisation - these costs cannot easily be attributed to specific products or services (also known as overheads). 'The materials and supplies needed for the company's day-to- day operations' or 'Clerical assistants who maintain the office' or 'Advertising and marketing communication' is example of indirect cost.

NEW QUESTION # 104
Which of the following statements is the best definition of 'value engineering?

A. Building value into a new product from design stage onwards
B. Value achieved by an engineering department
C. Producing good value products right first time.
D. Analysing perceived value after the product is available for sale

Answer: A

Explanation:
Value Engineering (VE) is concerned with new products. It is applied during product development. The focus is on reducing costs, improving function or both, by way of teamwork-based product evaluation and analysis. This takes place before any capital is invested in tooling, plant or equipment.
This is very significant, because according to many reports, up to 80% of a product's costs (throughout the rest of its life-cycle), are locked in at the design development stage. This is under-standable when you consider the design of any product determines many factors, such as tooling, plant and equipment, labour and skills, training costs, materials, shipping, installation, maintenance, as well as decommissioning and recycle costs.
LO 3, AC 3.4

NEW QUESTION # 105
Which of the following can cause overhead variance? Select TWO that apply:

A. Spike in monthly leasing fee
B. Decrease in production volume
C. Rising production worker's wage rate per hour
D. Spike in material price
E. Decreasing packaging costs

Answer: A,B

Explanation:
Overhead variances arise when the actual overhead costs incurred differ from the expected amounts.
Managers want to understand the reasons for these differences, and so should consider computing one or more of the overhead variances described below. Each of these variances applies to a different aspect of overhead expenditures. It is not necessary to calculate these variances when a manager cannot influence their outcome.
Fixed Overhead Spending Variance
The fixed overhead spending variance is the difference between the actual fixed overhead expense incurred and the budgeted fixed overhead expense. An unfavorable variance means that actual fixed overhead expenses were greater than anticipated. The formula for this variance is:
Actual fixed overhead - Budgeted fixed overhead = Fixed overhead spending variance The amount of expense related to fixed overhead should (as the name implies) be relatively fixed, and so the fixed overhead spending variance should not theoretically vary much from the budget.
Fixed Overhead Volume Variance
The fixed overhead volume variance is the difference between the amount of fixed overhead actually applied to produced goods based on production volume, and the amount that was budgeted to be applied to produced goods. For example, a company budgets for the allocation of $25,000 of fixed overhead costs to produced goods at the rate of $50 per unit produced, with the expectation that 500 units will be produced. However, the actual number of units produced is 600, so a total of $30,000 of fixed overhead costs are allocated. This creates a fixed overhead volume variance of $5,000.
Variable Overhead Efficiency Variance
The variable overhead efficiency variance is the difference between the actual and budgeted hours worked, which are then applied to the standard variable overhead rate per hour. The formula is:
Standard overhead rate x (Actual hours - Standard hours)
= Variable overhead efficiency variance
A favorable variance means that the actual hours worked were less than the budgeted hours, resulting in the application of the standard overhead rate across fewer hours, resulting in less expense being incurred.
However, a favorable variance does not necessarily mean that a company has incurred less actual overhead, it simply means that there was an improvement in the allocation base what was used to apply overhead.
Variable Overhead Spending Variance
The variable overhead spending variance is the difference between the actual and budgeted rates of spending on variable overhead. The variance is used to focus attention on those overhead costs that vary from expectations. The formula is:
Actual hours worked x (Actual overhead rate - standard overhead rate)
= Variable overhead spending variance
A favorable variance means that the actual variable overhead expenses incurred per labor hour were less than expected.
In the study guide, CIPS splits overhead variance into volume and expenditure variance. They can be understood as variable and fixed overhead variance respectively.

NEW QUESTION # 106
A company is building a new two-storey office block and will need to purchase new desks and chairs. There will not be much space available. What should be included in the specification for these desks and chairs?

A. A brand name
B. Key performance indicators
C. A list of inputs
D. Technical drawings

Answer: B

NEW QUESTION # 107
Why should procurement professionals develop business case before seeking approval to purchase capital equipment?

A. Business case is a tool that eliminates all risks associated with the project
B. A business case can be used as a replacement of purchase order
C. Using business case will prevent new entrants from entering the supply market
D. Devising business case may prompt the procurement to consider different options

Answer: D

Explanation:
A business case is developed during the early stages of a project and outlines the why, what, how, and who necessary to decide if it is worthwhile continuing a project. One of the first things you need to know when starting a new project are the benefits of the proposed business change and how to communicate those benefits to the business.
Preparing the business case involves an assessment of:
- Business problem or opportunity
- Benefits
- Risk
- Costs including investment appraisal
- Technical solutions
- Timescale
- Impact on operations
- Organizational capability to deliver the project outcomes
These project issues are an important part of the business case. They express the problems with the current situation and demonstrate the benefits of the new business vision. Making business case with multiple options and choices also prompts the procurement and senior management to consider alternatives. As a result, the organisation may opt out the best option.
The business case brings together the benefits, disadvantages, costs, and risks of the current situa-tion and future vision so that executive management can decide if the project should go ahead.
Reference:
- CIPS study guide page 19-21
- How to Write a Business Case - Template & Examples | Adobe Workfront
LO 1, AC 1.1

NEW QUESTION # 108
......

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