Business 0450 · IGCSE · Costs, scale of production and break-even analysis
Costs, scale of production and break-even analysis — practice question
Suliman runs a small website business that sells t-shirts. He works as a sole trader. He is studying data from his current business, with an extract shown in Table 4.1. Suliman plans to open his first shop and must choose an appropriate location. He is also deciding which sales promotion method to use for the new shop.
(a)[2]
Define ‘break-even output’:
(b)[2]
Calculate the margin of safety. Show your working:
(c)[4]
Outline two sales-promotion methods that Suliman could use for the new shop.
Method 1 to use:
Method 2 to use:
(d)[6]
Explain two factors Suliman ought to take into account when choosing a suitable location for the new shop.
(e)[6]
Do you think being a sole trader is the best type of organisation for a small business? 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: “The number of units that has to be made and sold for total revenue to match total cost” …