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:

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

2. Production: carrying out different stages of processes in converting raw materials to competed product.

3. Maintenance: focusing mainly on the machines/tools/equipment used in Storage and Production departments.

4. Quality Control: checking the completed product to meet customer expectation/quality standard.

5. Warehouse: receiving approved completed product from production department and preparing for shipment.

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 production supervisors 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, 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

described by you at part (a) when they want to improve their efficiency and

effectiveness within the department. (8 marks)

3. In order to operate efficiently and effectively, there are certain costs must be

incurred by your department.

1. Identify Five (5) important costs incurred by your department. (10 marks)
2. For each type of cost identified at part (c)(i) above, provide One (1) valid

reason that such cost will help to improve efficiency and effectiveness of

your department. (10 marks)

1. Refer to the costs at part (c)(i), assign them into the following categories and

apply the concepts you have described at part (a) to support your decision.

1. Variable costs and Fixed costs (10 marks)
2. Direct costs and indirect costs (10 marks)

(e) Describe Two (2) problems (faced by your department) that is related to

manufacturing process, and (10 marks)

(f) Research the types of solutions your department has adopted to solve the

problems, and (15 marks)

(g) Research the impact of such solution on the production costs of the factory. (15 marks)