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CIPS Exam L4M7 Topic 10 Question 6 Discussion
Actual exam question for
CIPS's
L4M7 exam
Question #: 6
Topic #: 10
[All L4M7 Questions]
Topic #: 10
Company XYZ is a candy manufacturer. Company XYZ makes a batch of 1,000 Christmas candy canes that are no longer edible after December 31. Company XYZ is able to sell 750 canes of the batch, but the other 250 are sitting in the warehouse. December 31 comes, and these candy canes is no longer sell-able. The batch of 250 candy canes belongs to which type of inventory?
Suggested Answer:
A
Obsolescent stock is stock, usually finished goods, which is in good condition and satisfactory working but for which demand is irreversibly falling towards zero. Once this demand reaches zero the stock can be considered 'obsolete'. It cannot be used or sold in its current state. Food ingredients (like candy canes) which are out of date are another example.
LO 2, AC 2.1
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