4.2 Costs, scale of production and break-even analysis IGCSE Business Studies

In this lesson I cover:

Identify and classify costs:

• Classifying costs using examples, e.g. fixed, variable, average, total
• Use cost data to help make simple cost-based decisions, e.g. to stop production or continue
  Economics and diseconomies of scale:
• The concept of economies of scale with examples, e.g. purchasing, marketing, financial, managerial, technical
• The concept of diseconomies of scale with examples, e.g. poor communication, lack of commitment from employees, weak coordination
  Break-even analysis:
• The concept of break-even
• Construct, complete or amend a simple break-even chart
• Interpret a given chart and use it to analyse a situation
• Calculate break-even output from given data
• Define, calculate and interpret the margin of safety
• Use break-even analysis to help make simple decisions, e.g. impact of higher price
• Understand the limitations of break-even analysis