Business 0450 · IGCSE · Costs, scale of production and break-even analysis
Costs, scale of production and break-even analysis — practice question
Sachin's company makes cricket bats for the mass market. Every two weeks he places an advert in a national newspaper. Since the business began two years ago, demand for the cricket bats has risen quickly. His 30 employees now make 3 million cricket bats a year. Table 1 gives a summary of the costs and selling price. Sachin is struggling to run the business alone. A friend has advised him to delegate some responsibilities, such as marketing and production decisions, to employees.
(a)[2]
Work out the total cost of making 3 million cricket bats.
(b)[2]
What does ‘variable cost’ mean?
(c)[4]
Identify and explain one advantage and one disadvantage for Sachin’s business from advertising in a national newspaper.
(d)[6]
Identify and explain two advantages for Sachin’s business of operating in the mass market.
(e)[6]
Do you think Sachin should delegate certain tasks to employees? Justify your answer.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “Overall cost is $12,200,000$” …