Business 7115 · O Level · Costs, scale of production and break-even analysis

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

(a(i))[2]

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

(a(ii))[2]

Calculate the average cost for 1 piece of furniture.

(a(iii))[4]

Explain how total cost and average cost will change if the output is increased to 200 items of furniture per month.

(b)[12]

Consider how the following three changes may affect WA. Which change is likely to have the biggest effect on WA? Justify your answer. A new $50 per tonne charge on businesses for waste removal. A rise of 5% in the legal minimum wage. An increase in tax on incomes. Final conclusion.

Worked solution & mark scheme

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

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