WorksheetsFAG1012 - Topic 3
Total questions: 56
Worksheet time: 2hrs 46mins
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
A factory's rent is $20,000 per month for production levels up to 10,000 units. Beyond 10,000 units, additional space must be rented for $5,000 per month. What concept does this situation best illustrate?
Variable cost
Fixed cost
Relevant range
Mixed cost
A company operates within a relevant range of 5,000 to 15,000 units. Fixed costs are $30,000 in this range. If production exceeds 15,000 units, additional machinery is required, increasing fixed costs to $40,000. What happens to the fixed cost per unit if production increases from 10,000 to 16,000 units?
Remains constant at $3 per unit
Decreases within the relevant range and increases beyond it
Increases within the relevant range
Decreases beyond the relevant range
A bakery produces custom cakes. The cost of flour, sugar, and eggs used to bake a specific cake is classified as:
Indirect costs
Conversion costs
Direct costs
Overhead costs
In a car manufacturing plant, the salary of the factory supervisor and the electricity cost of running machines are classified as:
Direct costs
Conversion costs
Indirect costs
Raw material costs
A clothing company calculates its conversion costs for producing shirts. The direct labor cost is $5,000, and the manufacturing overhead is $3,000. What is the total conversion cost?
$5,000
$8,000
$3,000
$2,000
A company spent $100,000 on research and development for a new product that was later discontinued due to market conditions. What type of cost is the $100,000, and how should it influence future decisions?
Sunk cost; it should not influence future decisions
Opportunity cost; it should influence future decisions
Variable cost; it should influence future decisions
Fixed cost; it should not influence future decisions
A farmer owns a piece of land and must decide between growing wheat or renting it out for $10,000 annually. If the farmer chooses to grow wheat, what is the opportunity cost of this decision?
The cost of seeds and labor for growing wheat
The $10,000 rental income forgone
The profit earned from selling wheat
There is no opportunity cost
A company sells its product for $50 per unit. The variable cost per unit is $30, and total fixed costs are $20,000. How many units must the company sell to break even?
400 units
500 units
1,000 units
2,000 units
Using the high-low method, the total cost at the highest activity level (10,000 units) is $150,000, and the total cost at the lowest activity level (5,000 units) is $100,000. What is the variable cost per unit?
$5 per unit
$10 per unit
$15 per unit
$20 per unit
A company calculated its fixed costs using the high-low method. The variable cost per unit is $8, and the total cost at the lowest activity level (2,000 units) is $36,000. What are the fixed costs?
$12,000
$16,000
$20,000
$24,000
1. (a) The compensation of employees who physically convert materials into the company’s product
2. (a) Materials that become a physical part of a finished product and whose costs are separately and conveniently traceable to the finished product
3. (a) Operating costs that are expensed in the period in which they are incurred
4. ___ Goods that are in the manufacturing process but are not yet complete
5. _______ Weighing costs against benefits to help make decisions
6. ____ Completed goods that have not yet been sold
7. _____ Product costs that are initially regarded as an asset for external financial reporting and are not expensed until the product is sold
8. (a) A system where materials are purchased and finished goods completed only as needed to satisfy customer orders
9. ________ Raw materials on hand for use in the manufacturing process
10. (a) The sequence of activities that adds value to a firm's products or services
a) ______ indirect materials used
b) ______ factory equipment depreciation
c) ______ indirect labor incurred
d) ______ rent on factory building
e) _______ direct materials used
f) _______ insurance expired on administrative facilities
g) _______ direct labor incurred
h) ______ insurance expired on factory building
i) ______ plant manager’s salary
j) ______ utilities on factory building
k) _______ utilities on administrative facilities
l) _______ salespersons’ salaries
1. TQM focuses solely on the quality of the final product.
2. Employee training and involvement are key components of TQM.
3. TQM encourages identifying defects early in the process rather than addressing them later.
4. Continuous improvement in TQM applies only to production processes, not to management practices.
5. Fixed costs remain constant in total but decrease per unit as production increases.
6. Variable costs increase per unit as production volume increases.
7. Mixed costs include both a fixed component and a variable component.
8. The total cost of rent is an example of a variable cost.
9. Fixed costs remain constant regardless of activity level, even when production goes beyond the relevant range.
10. The relevant range is a band of activity where cost behavior assumptions, such as fixed or variable costs, remain valid.
Refer to Table 1. Tudor Inc.’s period costs for 20X2 amount to:
Refer to Table 1. Tudor Inc.’s inventoriable product costs for 20X2 amount to:
Briefly describe a just-in-time management philosophy.
Explain the differences between fixed, variable, and mixed costs with examples. Discuss how understanding these costs can help managers in decision-making and cost control.
