Business 7115 · O Level · 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 manufactures beds through 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 appears in Table 2.1. The Operations Director wants to find out how a rise in inflation could influence CTF. She is aware that a manufacturing business can react to many environmental pressures.
(a)[2]
Define ‘public limited company’.
(b)[2]
Calculate the margin of safety for CTF’s children’s beds. Show your working.
(c)[4]
Outline two ways an increase in inflation might affect CTF.
(d)[6]
Explain two possible advantages to CTF of using batch production.
(e)[6]
Do you think manufacturing businesses should always respond 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 company owned by shareholders, but one that may offer shares to the public and whose shares can be traded on the stock exchange” …