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Costs, Scale of Production and Break-Even Analysis (Business Costs (Uses…

- - - - Exceptions
        
        The product has just recently been launched
        
        The fixed costs will still have to be paid
- - - - Gain discounts for buying in bulk
    - - Able to afford its own vehicles
    - - Raise capital more cheaply than smaller ones
    - - Able to afford Specialist managers
    - - Able to afford specialist machines and use it effectively
  - - - Difficult to send and receive accurate messages
    - - Workers may feel unimportant
    - - Takes longer for decisions made by managers to reach all group of workers
- - - - the 'y' axis measures money amounts - costs and revenue
      - the 'x' axis shows the number of units produced and sold
      - The fixed costs costs do not change at any level of output
      - The total line is the addiction of variable costs and fixed costs
    - - Managers are able to read off from the graph, the expected profit or loss to be made at any level of output
      - The impact of profit or loss of certain business decisions can also be shown by redrawing the graph
      - Show the safety margin
    - - Assumes that all goods produced are actually sold
      - Does not account for costs related to a change on the scale of production
      - Ignores many other aspects of the operations of a business
      - Assumes that costs and revenues can be drawn with straight lines