Business 7115 · O Level · Costs, scale of production and break-even analysis
Costs, scale of production and break-even analysis — practice question
PJK manufactures a selection of luxury sports watches. Skilled workers handmake each watch. Quality assurance is important. The Operations Director has been examining costs and prices because he wants to carry out a break-even analysis. This information appears in Table 1. He plans to invest in new technology to automate parts of the production process. The Operations Director believes this is the best route to improving profitability.
(a)[2]
What does the term ‘quality assurance’ mean?
(b)[2]
Identify two ways in which break-even analysis could be useful to PJK.
(c)[4]
Using the information in Table 1, draw a break-even chart for PJK on Figure 1.
(d)[6]
Identify and explain two advantages to PJK of employing skilled workers.
(e)[6]
Do you think that investing in new technology is the best way to improve profitability at PJK? 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: “Checking that quality standards are maintained throughout the production process / at every stage” …