CAIE A-Level Business 5.4.1 Cost Information

Explain the term variable costs.

Indicative content:

AO1 Knowledge and understanding

Knowledge of variable costs ${ }^{\mathrm{NF} \mathrm{F}}$ may include:

- Costs that vary with output

AO2 Application

Limited application ${ }^{\text {App }}$ applies knowledge of variable costs to one of the factors:

Developed application ${ }^{\triangle \mathrm{FP}}+{ }^{\mathrm{AFP}}$ applies knowledge of variable costs to two of the factors

- Any relevant example e.g. raw materials, packaging

- Increase or decrease with the production volume

- Increase or decrease with the sales volume

Application can be made to the source material or any other scenario/context/business/person

Accept all valid responses.

1(a)(ii)

Exemplar and annotations

Expenses that change with the level of output □ such as raw materials ${ }^{\mathrm{AFP}}$ for example the flour used for cakes.

Mark

Rationale

There is developed application of raw
materials (flour) as well as clear knowledge
of the concept at the start of the response.

Expenses that change with the level of output □ such as raw
materials ${ }^{\mathrm{APF}}$.

2

Knowledge first, followed by application to
an example

Expenses which vary with output K .

Expenses which do not stay the same $\boxed{T^{\mathrm{TV}}}$

1

Knowledge mark. No attempt to apply.

0

No link to output