4.4. Costs, scale of production and break-even analysis
- Syllabus
- 0264–2027–2028
- Topic
- 4.4
- Level
- —
4.4.1—Identify and classify costs
- classify and calculate costs using examples, e.g. fixed, variable, average and total
- use cost data to help make simple decisions, e.g. which product to produce, whether to continue or stop production, what price to set, help choose suppliers
4.4.2—Economies and diseconomies of scale
- concept of economies of scale: purchasing, marketing, financial, managerial, technical
- concept of diseconomies of scale: poor communication, lack of commitment or loyalty from employees, weak coordination, lack of control
4.4.3—Break-even analysis
- concept of break-even
- complete or amend a simple break-even chart
- interpret a break-even chart
- calculate break-even output
- define, calculate and interpret the margin of safety
- use break-even analysis to help make decisions: effect of changes in price, changes in fixed costs, changes in variable cost per unit
- limitations of break-even analysis
Objective notes
3 learning objectivesConceptIGCSE Business Studies