10 exam-style questions with answers and explanations, straight from our 1,030-question bank. Tap an answer to check yourself. When you're ready, take the scored version in the free practice test.
The CPP exam has 200 questions and runs 4 hours.
A company earns a net profit margin of 4% on sales. A buyer negotiates a permanent $30,000 reduction in annual material cost. Approximately what increase in sales would be required to produce the same effect on net profit?
Correct answer: D - $750,000
A truckload of components is destroyed in a highway accident while in transit. The purchase order specified F.O.B. shipping point. Which party bears the loss?
Correct answer: D - The buyer, because title passed at the shipping point
A buyer explains to a pump supplier that the pump must handle a specific corrosive acid at high temperature, and relies on the supplier to select a suitable model. The pump fails within weeks due to corrosion. Which warranty has MOST likely been breached?
Correct answer: A - The implied warranty of fitness for a particular purpose
Under the Uniform Commercial Code, a contract for the sale of goods valued at $500 or more must be in writing in order to be enforceable.
Correct answer: A - True
A supplier quotes a list price of $150.00 less a chain discount of 20, 5 and 5. What is the net price?
Correct answer: C - $108.30
An invoice carries terms of 2/10 net 30. Approximately what annualized rate is a buyer effectively paying by forgoing the discount and paying on day 30 instead?
Correct answer: D - 36%
A distributor buys an item for $80.00 and sells it for $100.00. Which statement correctly describes the markup and the gross margin on this item?
Correct answer: C - Markup is 25% on cost and gross margin is 20% on selling price
A prospective supplier reports current assets of $900,000, of which $400,000 is inventory, and current liabilities of $450,000. What is the supplier's quick ratio?
Correct answer: B - 1.11
A component can be produced in-house for annual fixed costs of $180,000 plus $25 per unit, or purchased from a supplier for $40 per unit. At what annual volume are the two alternatives equal in total cost?
Correct answer: C - 12,000 units
In ABC inventory analysis, items are assigned to Class A, B or C primarily on the basis of:
Correct answer: A - Annual dollar usage - unit cost times annual usage
The full bank has 1,020 more CPP questions with explanations.
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