CAIE IGCSE Business Studies 7.2. Production Question Bank

Practise production formulae using cost, output, productivity and break-even data, with working shown for each calculation.

Exam points

calculate productivity, average cost or total variable cost from output and cost data
read break-even charts or figures to find output, revenue and margin of safety
define cost and break-even terms before applying them to production decisions

Covered syllabus points

7.2.1—Labour productivity 7.2.2—Total variable cost 7.2.3—Variable cost per unit 7.2.4—Total cost 7.2.5—Average cost 7.2.6—Break-even output 7.2.7—Contribution per unit 7.2.8—Margin of safety

[Maximum number: 2]

BEF is a large business based in country X. It uses flow production to manufacture a wide range of products including toothpaste and shampoo. All BEF's products are currently sold in country X. BEF knows that having effective methods of internal communication are important. The Operations Director is analysing production data. An extract is shown in Table 4.1. BEF is considering exporting its products to country Y.

Table 4.1

Calculate output per worker per week in 2020. Show your working.

Award 2 marks for a correct answer. Award 1 mark for a correct method with an incorrect answer.

Method:
$\text{output per worker per week}=\frac{310\,000}{250}$

Answer:
$\boxed{1240\text{ units per worker per week}}$

Award 2 marks for the correct answer even if no working is shown.

[Maximum number: 2]

CTF is an ethical business. It manufactures a range of toys. CTF operates in a competitive market. Over the years technology has changed production at CTF. The Operations Manager is analysing break-even information. An extract of the cost and revenue data for product X is shown in Table 3.1. Following the closure of its local supplier, the Operations Manager is considering importing raw materials for product X.

Table 3.1

Calculate the total variable cost for product X .

Show your working.

Correct method:
$\text{total variable cost} =\text{output}\times\text{variable cost per unit} =18\,000\times 25 =\$450\,000$

Award 2 marks for the correct answer. Award 1 mark for the correct method with an incorrect answer.

Award only 1 mark if $\$450\,000$ appears in the working but is not given as the final answer. The dollar sign is not required.

[Maximum number: 2]

Nancy wants to be an entrepreneur. She has analysed market research data and decided to start up a book shop. Nancy has identified a suitable location and prepared a business plan. Nancy is calculating her total costs. She will use this information to help her complete a break-even chart as shown in Figure 2.1. Nancy is also considering using e-commerce.

Break-even chart for Nancy's new business

Define 'total cost'.

All question bank results loaded

Covered syllabus points

7.2. Production question 1

7.2. Production question 2

7.2. Production question 3