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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Sena

28 days ago

Decommissioning? More like decomposing, amirite? I mean, when that nuclear plant is done, it's gonna be a radioactive mess. Better bring your hazmat suit!

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Chantay

29 days ago

Servicing costs? That's just regular maintenance, nothing to do with the end of the plant's life. Decommissioning is the way to go, no doubt about it.

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Jolene

1 months ago

Insurance costs? Nah, that's an ongoing expense. You can't just cancel your insurance and call it a day when the plant's done for. Decommissioning is where it's at, for sure.

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Huey

2 days ago

I agree, decommissioning costs are a key factor in the total cost of ownership.

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Francis

6 days ago

Yeah, decommissioning costs are crucial for long-term investments like this.

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Nikita

13 days ago

Decommissioning costs are definitely important to consider for end-of-life costs.

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I agree with Jin, decommissioning costs are definitely part of the total cost of ownership.

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Jin

2 months ago

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

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