Business 7115 · O Level · Costs, scale of production and break-even analysis
Costs, scale of production and break-even analysis — practice question
Tom set up ALB 5 years ago and produces trainers (sneakers) from sustainable inputs such as wool. Protecting the environment is one of ALB's aims. During his research, Tom worked out some costs that he could use for break-even analysis; Figure 2.1 shows an extract. ALB sells its products through retailers. Tom believes a successful entrepreneur must also be a good manager.
(a)[2]
Define ‘variable costs’ in a business context.
(b)[2]
Identify two limitations of break-even analysis.\n\nLimitation 1:\n\nLimitation 2:
(c)[4]
Outline two possible benefits to ALB of distributing its products through retailers.
(d)[6]
Explain one advantage and one disadvantage to ALB of attempting to protect the environment.
(e)[6]
Do you think a successful entrepreneur must also be a good manager? 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 move with the level of output produced / sales made” …