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Edexcel IGCSE Business Studies 3.3 Costs & break-even analysis Question Bank

Practise calculating and interpreting revenue, cost, profit and break-even data, including charts, tables and business decisions.

Syllabus
First assessment 2019
Course
Business Studies 4BS1

Exam points

  • calculate profit, loss or break-even output from financial data in tables or charts
  • distinguish fixed and variable costs using examples from a business scenario
  • analyse limits of break-even charts, including sales assumptions and straight-line data

Covered syllabus points

3.3.1 Revenue, costs, profit and loss3.3.2 Break-even analysis3.3.3 Interpretation of break-even charts

3.3 Costs and break-even analysis question 1

[Maximum number: 1]

Nantgwynfaen Organic Farm (NOF) is a farm growing a range of fruit and vegetables. It has a farm shop and offers accommodation with breakfast. It was set up by Amanda and Ken Edwards in West Wales, UK.

NOF supports farmers by selling local organic produce in its farm shop. The produce from the farm shop is served to the visitors staying overnight at the farm.

NOF is committed to being environmentally friendly by recycling, avoiding the use of packaging and reducing the use of electricity.

Define the term profit.

3.3 Costs and break-even analysis question 2

[Maximum number: 1]

IKEA is a well-known home furniture retailer with stores throughout the world. It was started in 1943 by Ingvar Kamprad when he was given some money by his father for doing well at school. He wanted to produce furniture at a price that people could afford to buy.

He realised that transporting furniture to customers was difficult as goods were often damaged. He developed flat packs to avoid damage. A flat pack contained all the materials needed to self-assemble a table, a chair or a bed.

All IKEA stores are run as franchises.

Which one of the following are equal in a break-even graph?

Select one answer.

A

Fixed costs and variable costs

B

Fixed costs and revenue

C

Total costs and fixed costs

D

Total costs and revenue

3.3 Costs and break-even analysis question 3

[Maximum number: 8]

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.

Question (a)

(a)

If HRMW produce tennis racquets with the following costs:
Fixed costs =300000 Rupees
Variable costs =3000 Rupees
Sale price =5000 Rupees

Calculate the number of tennis racquets that would have to be made to break-even. You are advised to show your working.

[ 2 ]

Question (b)

(b)

Analyse the limitations for HRMW of using break-even charts when planning the manufacture of tennis racquets.

[ 6 ]
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