Business 0450 · IGCSE · Costs, scale of production and break-even analysis
Costs, scale of production and break-even analysis — practice question
GXC makes car components in country X from imported raw materials. During this year, GXC has bought new machinery. As a result, 100 employees have been made redundant, which is 30% of the workforce. Several stakeholder groups are unhappy with this decision. GXC operates flow production and gains from economies of scale. It exports the components to car manufacturers in country Y. Country X’s currency has recently appreciated, and GXC’s Managing Director is concerned about this.
(a)[2]
Identify any two economies of scale.
(b)[2]
What does the term ‘redundancy’ mean?
(c)[4]
Identify and explain one benefit and one drawback to GXC of using flow production.
(d)[6]
Identify and explain two stakeholder groups that may be affected by GXC’s decision to invest in new machinery.
(e)[6]
Should GXC’s Managing Director be worried about the recent appreciation in country X’s currency exchange rate?
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “Purchasing economies” …