CIPS Exam L4M7 Topic 2 Question 40 Discussion

Actual exam question for CIPS's L4M7 exam

Question #: 40
Topic #: 2

[All L4M7 Questions]

Nuclear Energy Group Limited (NEG) has a number of investment options currently under appraisal. As these are all long-term investments (more than 30 years), NEG is adopting a total cost of ownership approach. It has gathered data on all associated costs over the life of the investment. Which of the following will be regarded as end-of-life costs?

AInsurance costs

BServicing costs

CInstallation costs

DDecommissioning costs

Show Suggested Answer

Suggested Answer: D

In management accounting, reorder level (or reorder point) is the inventory level at which a com-pany would place a new order or start a new manufacturing run.

Reorder level depends on a company's work-order lead time and its demand during that time and whether the company maintain a safety stock.

If a company maintains a safety stock, reorder level calculation changes are follows:

Reorder Level = Average Demand Lead Time + Safety Stock

LO 2, AC 2.3

by Angelica at Jul 17, 2024, 06:55 PM

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Jin

2 days ago

I think end-of-life costs would include decommissioning costs.

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