The newly recruited manager is very concerned with the possible inefficiency and ineffectiveness of operating (Quality Control) 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. Describe the concepts of:

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

2. Explain the importance of those concepts at part (a) to the supervisors. (8 marks)
3. There are many types of costs incurred within the department.

1. Identify TWO (2) types of most important departmental cost (e.g. Electricity)

for each of the following category:

• Direct variable cost. (2 marks)
• Indirect variable cost. (2 marks)
• Direct fixed cost. (2 marks)

(ii) Demonstrate to the production supervisors on how the concepts you have explained at part (b) can guide them to classify each of the category at part (c)(i) above. (10 marks)

4. During the departmental operation, the production supervisors must be aware of some of the Direct variable costscan be changed to Indirect Variable costs or vice versa and handle them carefully.
5. Describe ONE (1) scenario for each of the following:

• Direct variable costs become indirect variable costs, and (2 marks)
• Indirect variable costs become direct variable costs. (2 marks)

2. For each of the scenario, identify not more than TWO (2) important

factor(s) that cause(s) the changes. (6 marks)

3. Briefly analyse those factor(s) that cause(s) the changes. (10 marks)