Worksheets7 Unit 04: Introduction to Cost Control
Total questions: 15
Worksheet time: 8mins
A small engineering workshop plans to reduce expenses without harming output quality. Which approach best aligns with cost control objectives in this context?
Delay maintenance to reduce spending this quarter
Increase production volume regardless of efficiency
Identify hidden costs and manage all activities
Eliminate indirect costs such as insurance entirely
A manufacturer is choosing between outsourcing a component or making it in-house. The in-house scenario includes raw materials, machine depreciation, and factory rent. Which classification correctly pairs each cost with its type to support the decision?
Raw materials: indirect; depreciation: direct; rent: variable
Raw materials: direct; depreciation: variable; rent: direct
Raw materials: fixed; depreciation: variable; rent: variable
Raw materials: variable; depreciation: fixed; rent: fixed
An engineering firm notices rising overtime, energy bills, and consumables as output increases. Which statement best explains how these cost categories typically behave and should be managed?
Overtime is semi-variable; energy is indirect; consumables are variable
Overtime is fixed; energy is direct; consumables are fixed
Overtime is variable; energy is direct; consumables are fixed
Overtime is indirect; energy is fixed; consumables are semi-variable
An automotive plant reports rising unit costs despite stable material prices. Audit data show frequent rework after quality failures and long operator walks between stations. Which action best targets the hidden costs driving the increase?
Track scrap and downtime, then redesign the layout
Negotiate cheaper steel with long-term contracts
Increase batch sizes to spread fixed overheads
Add overtime to accelerate delayed shipments
A fabrication shop owns an underused laser cutter. Analysis shows subcontracting laser cutting is cheaper and frees staff for robotic welding. Which reasoning best justifies the decision?
High sunk costs require continued in-house usage
Owning equipment always reduces variable costs
Outsourcing lowers total cost and reallocates resources
Keeping all processes in-house protects knowledge
In a sheet‑metal shop, operators spend time repositioning components because of layout inefficiency. Which plan most directly links evidence to an improvement that reduces hidden costs?
Hire additional operators to split the workload
Adopt larger machines to increase floor usage
Purchase more raw stock to reduce shortages
Map workflow times and implement layout redesign
An engineering workshop doubles monthly output of a machined part without changing processes. Which cost behavior best supports predicting the new monthly budget for cutting fluid, welding wire, and packaging?
Total cost increases slightly; unit cost rises sharply
Total cost roughly doubles; unit cost stays similar
Total and unit cost both triple proportionally
Total cost stays constant; unit cost halves
A CNC cell shows rising electricity use per unit even though output volume is constant. Which explanation aligns with cost behavior concepts and guides corrective action?
Direct materials became cheaper, lowering total overhead
Increased machine hours per part raised variable energy
Fixed rent increased, so electricity per unit must fall
More indirect costs were misclassified as direct labor
To improve profitability without directly affecting the product’s manufacturing, where should a plant manager focus cost control, and what justification supports this choice?
Direct material costs because they are unavoidable
Administrative costs since they enable efficient operations
Marketing costs because they set selling prices
Depreciation costs because they change with output
A production manager wants to set a product price. Which approach aligns with accurate pricing enabled by effective cost control?
Allocate direct, indirect, and semi-variable costs
Pick a round number that feels marketable
Use last year’s price plus a random margin
Copy a competitor price without adjustments
Which reasoning best explains how cost control supports lean manufacturing initiatives?
Lean eliminates all inspections so costs vanish
Lean prefers smaller teams so payroll drops
Lean relies only on intuition rather than data
Reliable cost data exposes waste and guides kaizen
A factory aims for long-term competitiveness. Which plan is most consistent with the overview?
Rely on short-term discounts to boost sales
Delay investment decisions indefinitely
Cut prices aggressively without cost insight
Use reliable cost data to prioritize automation
A new product shows high overhead absorption. What strategic step uses evidence for decision-making?
Reduce quality checks to save minutes
Adopt the cheapest materials immediately
Analyze indirect drivers and reallocate resources
Ignore overhead and push higher volumes
When setting transfer prices between departments, which method aligns with accurate cost identification?
Set price at zero to simplify accounting
Ignore utilities because they are indirect
Use whichever department shouts the loudest
Include direct labor and allocate shared utilities
A budgeting review finds administrative costs rising faster than output. What is a reasoned response?
Audit processes and reengineer support activities
Add more layers of approval to slow spending
Ignore the issue until next fiscal year
Cut engineering tools unrelated to admin work
