L3M3 Practice Questions

2011 is the correct answer.

You may wish to search for the Guiding Principles to familiarise yourself a little.

Title. In order to be sure you own something, you have to make sure you have acquired 'good title'.

Surprisingly, 'declared gifts of nominal value' can be accepted.

An opportunity cost is the cost of not being able to do something else.

For example, if a firm opts to build a new factory, it may not be able to create ten new retail outlets

which was another option open to it, in spending these particular funds. Or if you buy a holiday, you

may not be able to buy a new television. The television is the opportunity cost of the holiday ie the

benefit foregone.

The other types of cost shown are methods of classifying actual (real) costs. Opportunity costs are, in

a sense, not real; they are hypothesized and therefore do not show in the balance sheet or profit and

loss account of a business.

These are 'model form' contracts. Industry standard templates eg NEC ('New Engineering Con-tract');

or FIDIC model form contracts. You will find some examples produced by CIPS on the CIPS website eg

for IT procurements.

The business case will justify the expenditure.

Of the other answers offered, the only one which needs explanation presumably is 'cost analysis'.

This needs to be distinguished from 'price analysis'.

Win-win negotiations require a collaborative approach.

Since performance specifications are all to do with outputs, 'input-driven' leaps out as being the cor-

rect answer here.

Cost of production, and shareholder and managerial expectations of profit, are both internal factors

in decision-making. Although shareholders may be outside the firm, management will condition

shareholders' expectations. Customer perception of value and the extent of marketplace competition

are significantly outwith the control of the company.

Breakeven point. The firm breaks even: covers all of its fixed costs. At this point the firm has made

neither a profit nor a loss, and hopefully is about to enter profitability.