theme 2

Question 1

Definition of batch production

Answer 1

When items are produced together, in batches

Question 2

Advantages of Batch Production

Answer 2

More differentiated than flow production, can still differentiate goods. Way of adding value

Producing in batches reduces average unit costs, also the use of machines will reduce staff training costs etc, as there likely going to be highly skilled

machines are more accurate and precise, also make less mistakes. Less faulty products, perceived high quality…

Spreads risk, unlike job production, not just producing one item

Can lease the machinery/ also replace workers

Question 3

Disadvantages of batch production

Answer 3

period of time where the machines have to be stopped to change what they are producing, thus they’d be paying workers for nothing. Increases costs

High maintenance costs

If the mould has an error all of the products will as well, will increase costs as would need to start again

Not as quick as flow production

Question 4

Define limited liability

Answer 4

Shareholders aren’t legally responsible for debts of business

Question 5

Define unlimited liability

Answer 5

Shareholders are legally responsible for business debts

Question 6

Name the three internal sources of finance

Answer 6

Retained profit
Sale of assets
Owners capital

Question 7

Name the methods of external sources of finance

Answer 7

Loan
Share capital
Venture Capital
Grant
Trade Credit
Overdraft
Leasing

Question 8

What liability do partnerships and sole traders have

Answer 8

unlimited liability

Question 9

What common cash flow problems do business face

Answer 9

Low profit
Over expansion
To much trade credit given out
Too much stock
Overinvestment

Question 10

What makes up the:
Opening balance
Closing balance
NCF

Answer 10

Closing balance from previous month
NCF + Opening balance
TI + TO

Question 11

Limitations of a cash flow forecast

Answer 11

External factors may affect the validity of the estimate

Question 12

Advantages of a cash flow forecast

Answer 12

Helps identify when there will be shortages in cash for the month, can arrange for alternative finance, to keep business trading e.g. buy supplies

It is a way of becoming more financially strict

Help secure finance from a bank

Question 13

Advantages of a business plan

Answer 13

Can manage cash flow
Can allow you to set targets e.g. certain no of sales
Can make a strategy with info gathered

Question 14

Definition of job production

Answer 14

Tailor made products to suit specific customers

Question 15

Advantages of job production

Answer 15

Job is motivating for staff -> always doing something different
Can charge a premium price, added value

Question 16

Drawbacks of job production

Answer 16

Slow process -> low productivity
Labour intensive -> high skill expensive
Cost per unit increases when machine templates need to be replaced

Question 17

Define flow production

Answer 17

Continuous production of a single standardised product

Question 18

Advantages of flow production

Answer 18

Maximise economies of scale
Capital intensive -> can run constantly, higher productivity
-> can be more efficient
Cost per unit very low -> enables a competitive price

Question 19

Drawbacks of flow production

Answer 19

No personalisation -> lose ability to charge a premium price
If production line breaks, then costs will rocket
High overheads to start up

Question 20

Define cell production

Answer 20

Working in small groups/ cells, as part of a larger production line

Question 21

Advantages of cell production

Answer 21

Group working allows for ideas to be generated to improve production
Less floor space required
Flexibility to production process

Question 22

Disadvantages of cell production

Answer 22

Reliant on labour, if high skilled will be a high cost

Production not as quick as flow