Scenario -

TGA Processing plans to produce and sell an industrial product (can be consumed by human/animal) to its customers in West Malaysia. The factory consists of 5 departments: Storage, Production, Maintenance, Quality Control and Warehouse. The functions of the departments are as followed:

Chosen Department:

1. Storage: receiving, storing and preparing raw materials before production.

The newly recruited manager is very concerned with the possible inefficiency and ineffectiveness of operating _________________ (Storage/Production/Maintenance/QC/Warehouse) department when he/she discovers that all the operating supervisors in his/her department are very lack of academic credential. In order to overcome the problem, the manager decides to conduct a series of training sessions. In preparing the training materials, the manager requires you (as an intern) to conduct some research on the following:

1. Based on your research, using your department as cost object, describe the concepts of:

1. Direct cost (3 marks)
2. Indirect cost. (3 marks)
3. Variable cost (3 marks)
4. Fixed cost. (3 marks)

2. Explain why it is very important for the supervisors to understand the concepts

Direct cost, indirect cost, variable cost, fixed cost described by you at part (a) when they want to improve their efficiency and effectiveness within the department. (8 marks)

Help me with question B, on why it is very important for supervisors to understand the concepts of direct cost, indirect cost, variable cost, fixed cost that is described in (A) to improve their efficiency and effectiveness within storage department.