FAG1012 - Topic 3

A production team discovers a defect in a batch of products during quality checks. What should the team do according to TQM principles?

• Ignore the defect and continue production to meet deadlines.

• Halt production, analyze the cause, and implement corrective actions.

• Replace the defective batch without investigating the cause.

• Inform the customer and let them decide how to proceed.

An employee proposes a new method to reduce errors in assembling products. What should the management do under TQM principles?

• Reject the idea because it might disrupt current processes.

• Encourage the employee to test the method and analyze the results.

• Implement the method immediately without testing.

• Ignore the suggestion as it is not from a senior manager.

A company decides to offer incentives to employees who identify ways to improve quality. Which TQM principle does this align with?

• Customer focus.

• Continuous improvement.

• Employee empowerment.

• Leadership commitment.

The company wins an industry award for outstanding quality in production. How should they use this recognition under TQM principles?

• Celebrate it and use it to market their products.

• Focus on maintaining the same quality level.

• Use the recognition as motivation to set higher quality goals.

• Reduce investment in quality programs since they’ve proven effective.

A factory incurs a monthly rent of $15,000. Whether it produces 1 unit or 10,000 units, the rent remains the same. However, the rent per unit decreases as production increases. What type of cost does this describe?

• Variable cost

• Fixed cost

• Mixed cost

• Overhead cost

A bakery spends $4 on ingredients for each loaf of bread it bakes. If the bakery produces 100 loaves, the cost is $400, and for 1,000 loaves, it’s $4,000. What type of cost is this?

• Fixed cost

• Variable cost

• Mixed cost

• Overhead cost

A department store has a monthly utility bill with a $200 fixed service charge and $0.05 per kilowatt-hour of electricity used. What type of cost is this?

• Fixed cost

• Variable cost

• Mixed cost

• Overhead cost

A company’s production manager wants to allocate fixed costs. What happens to the fixed cost per unit if production volume increases?

• Increases

• Decreases

• Remains constant

• Varies unpredictably

An ice cream parlor’s labor costs include a fixed manager salary of $3,000 per month and an additional $1.50 per hour for part-time staff based on hours worked. This labor cost is best classified as:

• Fixed cost

• Variable cost

• Mixed cost

• Operating cost

A company manufactures products that require $5 per unit in raw materials. If the company produces zero units in a month, what is the total variable cost?

• $0

• $5

• $10

• $50