Business 7115 · O Level · Costs, scale of production and break-even analysis
Costs, scale of production and break-even analysis — practice question
GHT operates as a public limited company. It manufactures steel items such as gates and garage doors. The business uses a flat organisational structure and a short chain of command. GHT has several stakeholder groups, among them 600 employees. The Managing Director is thinking about using job rotation to raise employee motivation. He has also been reviewing some financial data. An extract appears in Table 3.1.
(a)[2]
Define the term ‘fixed cost’.
(b)[2]
Calculate the margin of safety for product X in 2020, and show your working.
(c)[4]
Outline two benefits to GHT of operating with a short chain of command.
(d)[6]
Explain one benefit and one drawback to GHT of using job rotation as a way to improve employee motivation.
(e)[6]
Do you think the shareholders are the most important stakeholder group to the success of a limited company? 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: “Costs that stay unchanged as output or sales change” …