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Question 1
Which statement best explains why strong safety systems are essential in an e-waste factory?
Correct Answer:
They prevent legal fines and reduce risk from chemical and operational hazards
Explanation:
Safety systems in an e-waste factory are essential because they provide the controls and procedures that limit exposure to hazardous substances and manage the risks inherent in dismantling and processing electronics. E-waste can contain toxic chemicals such as lead, mercury, cadmium, and other hazardous materials, as well as flammable or reactive components. Strong safety systems—like proper ventilation, containment, safe handling and storage of chemicals, protective equipment, training, and emergency response plans—reduce the chances of chemical exposure, spills, fires, or injuries. This directly ties to complying with health, safety, and environmental laws and regulations, so strong safety systems help prevent legal fines and sanctions. They also lower the costs associated with accidents, such as medical treatment, downtime, equipment damage, and higher insurance premiums. So the main reason safety systems matter is that they protect workers and the business by reducing risk and ensuring legal compliance. While safety can improve a company’s reputation or even contribute to smoother operations, it does not guarantee profits and is not optional in this context.
Question 2
One limitation of using ARR to assess expansion.
Correct Answer:
ARR ignores the timing of cash flows and is based on accounting profit rather than cash
Explanation:
The question tests a key limitation of using the Accounting Rate of Return to decide on an expansion. ARR looks at accounting profits in relation to accounting investment, but it ignores when cash actually flows in and out. Because it is based on profits rather than cash, non-cash items like depreciation can make a project appear profitable on ARR even when it doesn’t generate real cash. There’s no discounting of future cash receipts, so ARR also fails to reflect the time value of money. As a result, a project could look attractive by ARR while its cash return is weak, which can mislead decision‑makers about the true financial benefit of expanding. This is why ARR is considered a limited or less reliable measure for evaluating expansion opportunities compared with methods that use cash flows and time value, such as NPV or IRR.
Question 3
Why might ABC need to recruit new staff?
Correct Answer:
To acquire scientists, engineers, and technicians with specialist knowledge of e-waste processing and metals recovery
Explanation:
Recruitment is about bringing in people with the skills the business currently lacks and needs to perform its specialized work. In this case, ABC requires scientists, engineers, and technicians with deep knowledge of e-waste processing and metals recovery to design, operate, and improve the recovery processes, ensure safety, SAMPLEand meet environmental regulations. Hiring these specialists builds internal capability, supports efficient production, and helps drive innovation, rather than relying on external help or reducing capacity. Other options wouldn’t address the need for technical expertise and could weaken the operation by cutting staff or resources.
Question 4
If input variability is high, what is a likely effect on lean production in ABC?
Correct Answer:
Some input variability may limit how lean the process can become.
Explanation:
When input variability is high, the main idea to grasp is that lean production depends on a smooth, predictable flow. If the inputs (materials, components, timing, quality) vary a lot, it disrupts that flow and makes it harder to keep to a steady pace or takt time. That means the system can’t achieve the full lean potential; some variability will always cap how lean the process can become. So, the best answer is that some input variability may limit how lean the process can become. It isn’t feasible to implement lean without any modifications when inputs are unstable, nor is it realistic to expect perfect lean regardless of variability, nor to believe lean will completely eliminate all variability.
Question 5
Which is a likely fixed cost for an e-waste factory?
Correct Answer:
Rent
Explanation:
Fixed costs are expenses that stay the same regardless of how much you produce in the short term. Rent fits this because a factory’s lease is typically a fixed monthly or yearly payment that doesn’t change with the amount of e-waste processed. It’s committed cost you pay whether you operate at full capacity or pause production. In contrast, transport of circuit boards depends on how many boards you move, so it rises with activity. Packaging materials also vary with the number of items. Energy costs usually change with production levels, since more manufacturing uses more electricity, though there can be a small fixed component, the typical expectation is that energy is variable with output.
Question 1
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About this Exam

Prepare with the ABC IB Business Management Paper 1 Practice Test practice quiz. This question bank includes 10 questions covering e-waste, factory, cost, business, and management. Use it to review important concepts, identify knowledge gaps, and build confidence for the related exam, course, or assessment.

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ABC IB Business Management Paper 1 Practice Test

This practice set contains 10 questions from the matching question bank and focuses on e-waste, factory, cost, business, and management. Work through each question carefully, review the provided solutions, and revisit topics that need more study before your next attempt.

This is an independent study resource intended for practice and review; it is not an official examination or an endorsement by any organization named in the title.

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