Page 230 - Cambridge IGCSE Business Studies

Cambridge IGCSE Business Studies Section 4 Operations management

2 Solar Enterprises (SE) is a manufacturer of solar panels.
SE has seen a steady growth in sales over the past fi ve
years. In 2012 sales were 18,000 units and it expects a
15% increase in sales for 2013. This growth has enabled
SE to benefi t from economies of scale.
SE’s accountant keeps a tight control of both fi xed and
variable costs. She uses cost information to produce
break-even charts for its most popular products. The
Managing Director thinks that producing break even
charts is a waste of time and effort.

a What is meant by ‘break-even’? [2]

b Calculate SE’s expected sales for 2013. [2]
c Using examples, explain the difference between SE’s
fi xed costs and variable costs. [4]
d Identify and explain how SE may have benefi tted
from any two types of economies of scale. [6]
e Do you agree with the Managing Director when he
says ‘producing break-even charts is a waste of time
and effort’? Justify your answer. [6]

228 Total available marks 40