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IB Business Management SL 5.5.1 Contribution Questions

Practise 5.5.1 Contribution in IB Business Management SL by connecting concepts to case evidence and decisions.

Syllabus
First assessment 2024
Course
Business management SL
Level
SL

Exam points

  • Distinguish total contribution and contribution per unit
  • Contribution supports break-even, pricing, and output decisions

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Study 5.5.1—Contribution conceptsOpen the corresponding Concept lesson for explanations, examples and exam connections.

IB Business Management SL 5.5.1 Contribution Questions question 1

[Maximum number: 2]

Alfombras Horizonte (AH)


Alfombras Horizonte (AH) produces natural henequen* rugs in Yucatán, Mexico, and sells them online. AH rugs are very popular among young people because of their eco-friendly materials and AH's mission statement: "We are responsible with Mother Earth for our environment and ourselves."
In 2022, A H 's costs increased, but it kept prices unchanged. For 2023, A H decided to change its pricing

Figure for Question IB Business Management SL 5.5.1 Contribution Questions question 1 — IB Business Management SL

strategy and pass on all cost increases to customers.

Table 2: Selected financial information for \(\boldsymbol{A

Table 2: Selected financial information for \(\boldsymbol{A

* henequen: a fibre plant from Mexico and Guatemala. Fabrics made from henequen fibre are used to make a wide variety of products, including bags, rugs and hammocks.

Explain whether A H's change in pricing strategy for 2023 will have an impact on its unit contribution.

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