Business 0450 · IGCSE · Costs, scale of production and break-even analysis
Costs, scale of production and break-even analysis — practice question
CHW manufactures electrical goods, including cameras. The business is creating new products. The Managing Director understands that the product life-cycle stage can shape CHW’s promotion decisions. He is studying data for one of its products; an extract is shown in Table 3.1. The business also wants to add flow production to the factory.
(a)[2]
Identify one benefit and one cost for a business of developing new products.
(b)[2]
Calculate the break-even output for 2021. Show your working.
(c)[4]
Outline two ways CHW could improve its margin of safety.
(d)[6]
Explain two ways in which the stage of the product life cycle could influence CHW’s decisions about promotion.
(e)[6]
Do you think flow production is the best production method for a manufacturing business to use? 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: “Diversification / risk spreading” …