2019 paper 1

Question 1

what is a variable cost

Answer 1

it is a cost that changes based on how much a business produces or is selling

Question 2

give an example of a variable cost

Answer 2

amount of labor and raw materials

Question 3

what is inventory

Answer 3

its the collection of goods a business has to sell or use in production

Question 4

what is the formula to calculate the closing cash balance

Answer 4

Opening Cash Balance + Cash Inflows - Cash Outflows

Question 5

what is the formula for opening cash balance

Answer 5

it is the amount of cash balance of the previous period

Question 6

define the term acid test ratio

Answer 6

it is the amount of assets available to pay for a expense within 90 days

Question 7

what is a break even point

Answer 7

where a businesses revenues are equal to the total costs where a business is not making profit but isnt losing money

Question 8

how do you calculate the break even point

Answer 8

Fixed Costs/
(Selling Price per Unit - Variable Cost per Unit)

Question 9

what is batch flow production

Answer 9

it is a production process where products are produced in batches

Question 10

what are some pros of batch flow ( 3 )

Answer 10

• it is time saving because defaults can quickly be found
• there can be less wastage because if defaults are found in one batch you can fix it from the next batch onwards
  -its good for making a medium amount of products

Question 11

what are some cons of batch flow (3)

Answer 11

• categorizing and sorting products or materials into batches can be time consuming and delay the production process
• to sort and organize the materials or products in can be costly in terms of labor
  -organizing and planning how to batch the products or materials can be complicated

Question 12

what is flow production

Answer 12

it is when in the production process each product goes through the process step by step continuously

Question 13

what are some pros of flowing (3)

Answer 13

• time saving because it is a continuous process without any delays
  -it is good for producing large amounts of products
• it is money saving as there is less need for labor

Question 14

what are some cons for flowing (3)

Answer 14

• if there is a quality issue of a machine breakdown it can lead to a huge wastage of product

-this process works if there is a high demand for a product because you are able to make large volumes of this product

• setting up a flow production system can be very costly