Page 6 - CIMA OCS Workbook February 2019 - Day 1 Suggested Solutions

CIMA FEBRUARY 2019 – OPERATIONAL CASE STUDY

EXERCISE 1(C) - QUALITY COSTING

Type of cost How it could apply to Trigg Adventure

Prevention Costs • Choice of suppliers for key raw materials – especially timber
• Purchasing better quality cutting and drilling equipment in the first
place to reduce the risk of customers having difficulties assembling
frames.
• Ensuring all production staff are highly trained
• Regular maintenance of equipment

Appraisal Costs • Not told of any QC procedures!

Internal Failure • Cost of raw materials, especially timber, rejected or damaged while in
Costs stores
• Cost of disposing of waste – e.g. sawdust for recycling

External Failure • Given the competitive nature of the industry it is vital that frames and
Costs components arrive in prime condition for the domestic market (e.g.
packaging not damaged, no cracks in the wood, no inconsistencies due
to poor quality control)
• Poor quality is most likely to result in lost customers and damage to
the brand.
• It will also limit Trigg’s ability to win tenders for commercial contracts.

EXERCISE 1(D) - ENVIRONMENTAL COSTING

Type of cost How it could apply to Trigg Adventure’s environmental footprint

Prevention Costs • Choice of suppliers – e.g. where they are based in Fawland to reduce
green impact of transportation?
• Choice of woods – are they from renewable sources?
• Regular maintenance of equipment to ensure energy efficiency.
• Use of recyclable packaging.
• Installation of water recycling equipment in factory

Appraisal Costs • Regular monitoring of energy usage to identify if usage has increased
beyond that expected.
• Regular monitoring of water usage to limit waste and leaks.
• Sorting bins in the factory to separate out what can be recycled and so
not contribute to landfill.

Internal Failure Costs • Ensuring any waste wood and off-cuts is collected and recycled into
sawdust, rather than contributing to landfill.

External Failure Costs • Most products are made of timber, which will hopefully be recycled
or, if sent to landfill, will decompose and rot and eventually turn into
compost.
• Very difficult for Trigg to monitor the extent to which customers are
disposing of packaging in an appropriate manner

48 KAPLAN PUBLISHING