Paper 2

Question 1

Ways to reduce break even point

Answer 1

Maximise selling price
Reduce costs
Lower fixed costs

Question 2

Types of fixed costs

Answer 2

• rent
• salaries e.g of finance
• marketing costs
• insurance

Question 3

Types of variable costs

Answer 3

• raw materials
• wages of employees
• electricity/gas/water

Question 4

Ways of raising finance

Answer 4

• internal
• external

Question 5

Internal ways to raise finance

Answer 5

From within the business, can keep full control of operations and dose not need to pay high interest
E.g retained profit, selling unwanted assets, owners capital

Question 6

External ways to raise finance

Answer 6

Outside the business, meaning they can raise larger funds compared to internal.
E.g bank overdraft, trade credit, loans, mortgage, crowdfunding, taking on a new partner and new share issue.