CAIE IGCSE Business Studies 7.2.5 Average cost
Practise defining and calculating average cost per unit from total cost and output, with working shown for short cost questions.
- Syllabus
- 2027–2029
- Course
- Business 0264
Exam points
- calculate average cost by dividing total cost by the number of units produced
- define average cost as the cost of producing one unit of output
- use clear working so the method earns credit even if the final figure is wrong
7.2.5—Average cost question 1
MLC makes motorcycles. The Managing Director has been analysing MLC's costs. An extract of this information is shown in Table 2.1. To reduce average costs, MLC plans to close its factory and relocate production to another country. Only 50 of the existing employees will be offered jobs at the new location. The trade union has been informed. All the new employees will be given either on-the-job training or off-the-job training. This planned relocation will have an impact on MLC's income statement.
Table 2.1
Calculate the average cost of one motorcycle. Show your working.
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