Unit 4 -sumn sumn sumn

Question 1

EOS

Answer 1

advantages of large scale production

Question 2

Purchasing economies

Answer 2

special prices and discounts for buying in bulk

in order to maximise production efficiency in terms of economies

Question 3

marketing/Advertising economies

Answer 3

cheaper advert offers than smaller firms

Question 4

financial economies

Answer 4

more trust to larger firms

Question 5

managerial economies

Answer 5

accountants, marketing managers can be hired which results in better decision being taken and reduction in overall unit costs

Question 6

Technichal economies

Answer 6

• use of specialist, indivisible equipment which are not available to small firms.
• as a result they use flow of production and division of labour
• leading to fast production and lower average costs

Question 7

define

Marginal costs

Answer 7

• the change in overall production costs if one extra unit is produced
• the marginal costs involved in making one more wooden table are the additional materials and labour cost incurred.

Question 8

Marginal cost formula

Answer 8

Marginal Cost = Change in Total Expenses ÷ Change in Quantity of Units Produced

Question 9

Avg cost per unit formula

Answer 9

Total cost / output

Question 10

BEP define

Answer 10

at this point cost=profit and revenue, no gain or loss.

Question 11

Contribution per unit, def and formula

Answer 11

• The excess of price over variable costs
• cont. / unit = Selling price-variable costs

Question 12

BEO form and def

Answer 12

• FC/cont per unit
• The minimum units to be made so no loss or profit

Question 13

Margine of safety def and form

Answer 13

• amt of units between BEO and max units. As this region is where theres a profit
• margin of safety= Maximum capacity- Break even output

Question 14

profit at masimum

Answer 14

• ## Profit at maximum output = Contribution per unit X margin of safety

Question 15

how would i calculate level of output needed to reach a certain profit?

Answer 15

(Fixed cost + target profit)/ Contribution per unit

Question 16

state 3 diseconomies of scales

Answer 16

• external stuff: crumbl cookies
• Co-ordination: in a large firm
• Human relations : salaries and communications.

Question 17

Total cost=

Answer 17

= fixed cost + variable cost

Question 17

TR from graph, how to graph it

Answer 17

multiply x-axis by SP

Question 17

Graphing TC

Answer 17

• graph FC
• Graph VC
• take a point on x-axis, read the lines of FC and VC, add them and plot the point of TC at that unit amt.

Question 18

TC is prallel to —— by —– amt of lines

Answer 18

• VC line
• FC above 0 lines.

if the y axis goes up in 50 sales, and FC is at 100 sales, the FC line is 2 lines above 0. SO VC will be 2 lines under every point of FC

Question 18

graphing VC

Answer 18

VC x units(x-axis)

Question 18

step by step to graph BEP graph.

Answer 18

• FC
• VC
• TC
• TR
• calc BEP