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CIPS Exam L4M7 Topic 5 Question 29 Discussion

Actual exam question for CIPS's L4M7 exam
Question #: 29
Topic #: 5
[All L4M7 Questions]

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?

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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 Food ingredients (like candy canes) which are out of date are another example.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

by Mitsue at Mar 05, 2024, 04:49 PM

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Rocco
5 months ago
I see what you're saying, Huey. So it seems like the consensus is leaning towards A) Obsolete inventory as the correct answer.
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Huey
6 months ago
That's a valid point, Iraida. However, I believe the key distinction is that they are no longer sell-able, which aligns more with obsolete inventory.
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Iraida
6 months ago
But could it also be C) Redundant inventory? I mean, they are just sitting in the warehouse taking up space.
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Rocco
6 months ago
I agree with Huey. Since the candy canes are no longer sell-able after December 31, they would be considered obsolete inventory.
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Huey
6 months ago
I think the answer is A) Obsolete inventory.
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Vivienne
6 months ago
I think it's a combination of both. The candy canes are both obsolete and redundant.
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Andra
7 months ago
I see your point, Cheryl. It could be classified as redundant inventory as well.
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Cheryl
7 months ago
But could it also be considered as redundant inventory since they are no longer usable?
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Cathrine
7 months ago
I agree with Felicia, those unsold candy canes are definitely obsolete inventory.
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Felicia
7 months ago
I think the batch of 250 candy canes belongs to obsolete inventory.
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