Business 0450 · IGCSE · Costs, scale of production and break-even analysis
Costs, scale of production and break-even analysis — practice question
CTF is a public limited company. It makes beds by means of batch production. The Operations Director is using break-even analysis to work out the margin of safety for children’s beds. An extract from CTF’s output data is shown in Table 2.1. The Operations Director wants to find out how a rise in inflation could affect CTF. She is aware that there are many environmental pressures to which a manufacturing business could react.
(a)[2]
Define ‘public limited company’ by stating what it means.
(b)[2]
Calculate the margin of safety for CTF’s children’s beds. Make your working clear.
(c)[4]
Outline two ways a rise in inflation might influence CTF.
(d)[6]
Explain two possible advantages to CTF of using batch production.
(e)[6]
Do you think manufacturing businesses should always react to environmental pressures? 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: “A business owned by shareholders whose shares may be offered to the public and traded on a stock exchange” …