Skip Heads an Insurance Company That He Would Like to Move

question 64

Multiple Choice

Skip heads an insurance company that he would like to move to a higher level of performance. Lately, his managers have been telling him that there are some issues with how policies are being marketed, mainly due to the way management has structured its procedures for creating policies. One of the managers asks Skip how they should deal with the employees in case they become aware of the problem. What should Skip tell him?

• A)that this is a management problem and it does not concern the employees
• B)to inform the workers of the situation and challenge them to help solve it
• C)to acknowledge the problem exists, but withhold the details from employees
• D)that the employees should be told they are at fault and need to fix it

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Definitions:

Fixed Manufacturing Overhead

The costs that do not change with the level of production, including costs such as rent, insurance, and salaries for management.

Direct Materials

Direct materials are raw materials that are directly traceable to the manufacturing of a specific product and constitute a significant portion of its production cost.

Direct Labor

The labor costs directly tied to the production of goods, including wages of workers actively engaged in manufacturing.

Variable Costs

Costs that change in proportion to the level of production or sales activity.