Business 0450 · IGCSE · Costs, scale of production and break-even analysis

Costs, scale of production and break-even analysis — practice question

(a(i))[2]

Calculate the monthly total cost of making 100 pieces of furniture.

(a(ii))[2]

Calculate the average cost of 1 piece of furniture.

(a(iii))[4]

Explain how total cost and average cost will alter if output is raised to 200 items of furniture per month.

(b)[12]

Think about how the following three changes might affect WA. Which change is likely to have the biggest effect on WA? Justify your answer. Introduction of new cost to businesses of $50 per tonne for removing waste. Increase in legal minimum wage by 5%. Increase in tax on incomes.

Worked solution & mark scheme

This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: Monthly total cost: $10 000 + $1 200 + $800 + $4 000 = $16 000 per month

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