Practise interpreting break-even charts by analysing cost and revenue assumptions, output decisions and the limits of using simplified chart data.
3 H R M W employs staff to design the products it manufactures. The aim is to add features so that the products are better than any others on the market.
Analyse the limitations for HRMW of using break-even charts when planning the manufacture of tennis racquets.
AO2 = 3 marks AO3 = 3 marks
AO2
- Using break-even charts assumes that all the tennis racquets are sold.
- The simple chart assumes that the costs and revenues for the tennis racquets can be represented by a straight line.
AO3
- The chart does not show if some of the tennis racquets are kept as stock items or if some of them remain unsold.
- There may be other factors that need to be considered. Increased output may involve paying staff additional wages to produce more tennis racquets.
Level
Mark
Descriptor
0
No rewardable material.
Level 1
1-2
- Limited application of knowledge and understanding of business concepts and issues to the business context. (AO2)
- Attempts to deconstruct business information and/or issues, finding limited connections between points. (AO3)
Level 2
3-4
- Sound application of knowledge and understanding of business concepts and issues to the business context although there may be some inconsistencies. (AO2)
- Deconstructs business information and/or issues, finding interconnected points with chains of reasoning, although there may be some logical inconsistencies. (AO3)
Level 3
5-6
- Detailed application of knowledge and understanding of business concepts and issues to the business context throughout. (AO2)
- Deconstructs business information and/or issues, finding detailed interconnected points with logical chains of reasoning. (AO3)
Question
Number
Indicative content
Mark