10508769
Description
Flashcards by Catherine Tem, updated more than 1 year ago
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Created by Catherine Tem
over 6 years ago
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| Question | Answer |
| Economies of Scale | -is the reduction in average cost as a result of cost of operations |
| Cost Classification | -Fixed cost - cost that do not change with output. e.g factory rent or salary of manager -Variable cost - cost that change in direct proportion to output. e.g raw material Total cost - all Fixed and Variable cost of producing total output. |
| Types of Economies of Scale | -Financial -Managerial -Purchasing -Marketing -Technical |
| Diseconomies of Scale | -factors that cause average cost to rise as scale of operation increases |
| Main causes of DOS | -Poor control -Poor communication -Demotivation of workers |
| Break-even chart | -is the level of output where revenue equals total cost; the business is making neither profit nor loss |
| Uses of Break-even chart | -calculate how many units it needs before it starts to make profit -calculate the effect on profit of increasing or decreasing the price of a product -calculate the effects on profits of an increase or decrease on business costs |
| Benefits of Break-even chart | -can show the effect of a decision to change costs or revenues -easy to construct -can help other important decision such as the location or relocation of a business |
| Limitations of Break-even chart | -it is not easy to separate fixed into cost and variable -assumes that all costs and revenues can be represented in a straight line -assumes that all output is sold - do not allow for inventories and cost of holding these |
| Methods of Production | -Job Production -Batch Production Flow Production |
| Quantitative factors for choosing a business location | -Cost of site -availability and cost of labour -transport costs -market potential -issues |
| Qualitative factors for choosing a business location | -site of site -legal controls -infrastructure -ethical |
| why businesses locate their operations to another country | -to achieve growth -to reduce production cost -to locate production closer to the market |
| Benefits of international location decisions | -lower labour costs -access to global market -to avoid legal barriers and import tarrifs -government incentives |
| Limitations of international location decisions | -Ethical concerns -cultural differences -communication problems -quality issues |
| Quality | -is ensuring a good or service that meets the need and requirement of its consumer |
| Quality Standard | -is the minimum acceptance standard of production or service acceptable to consumers |
| Importance of quality to a business | -Helps develop a strong brand image -Reduces customer complaints and returns -keeps customers and attracts new customers -charge a premium price -reduce costs -encourage wholesailers and resailers to stock its product |
| Quality Control | -is checking the quality of goods through inspection |
| Problems of Quality Control | -the work can be repetitive and boring this may demotivate the inspector, resulting in them not performing their task efficiently -the uses of quality inspectors take any responsibility of quality away from the workers -if inspection only takes place at the end of the process, then problems in quality that occur at the beginning are not found soon enough. resources are wasted completing a product that should have been rejected earlier in the production process |
| Quality Assurance | -a system of setting agreed standards for every stage of production |
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