Methods of production.

Break even.
4.1) Production of .
job production.
producing custom work
Advantages.
-

-
varied job (noboredom)

Higher price charged

Break even pointi s reached when a business's total revenue
exactly equals to
for specific customer the total costs and the business is
productm eetc ustomer
making a profit, nor is it
making a loss.
-

requirements not

Goods and SerVICES.

or

in less
small batch

iose of mass market

quantities
of work
less than
advantagestionhighsailedacaused
itis a
way of
its total costs.
finding the
out
minimum s ales
level of required for firm to pay off
products. -

product made to order, so errors be expensive to fix.

may
of production. Formula.
Meaning
-Batchaductantigen
Advantages.
>Process of adding
eineguarentgevatrkmenworthmaking contrition'sunit
value to a
Break even
Product
(using land, labour, capital
and enterprise) to
satisfy customer as required. Machines can
different
needs. Disadvantages. contribution per unit
be changed to produced
Selling Price
-
expensive to produce goods
-

variable costs per unit

tangible intangible
-
-

used to transform batch of differentproduct

machines have to be reset before next batch, slows production
a warehouse space needed to store
products
inputs into goods or services.
Breakeven
-Labour required to move items from
stage of PROS &
one batha n
CONS.
productivity. Mass production. Advantages.
·

scale) PROS. CONS.

the production of
-Goods produced quickly (economies of

G goods are constanta tall

efficiency shows how Assumes sale prices
-

business
way to measure increased
efficiency through long it will take
-

use of machinery
-

in
large quantities, levels of output

Quantity of.Onthe
-sreaestheseitabiot fchanges-vemonsandangonpearlesatSamgenes
Less labour needed (machine does work)
-

especially by machinery
-

AKA:flow production
Disadvantages. in sale
prices
or

improveProductivityin -boring for workers (same producta ll the times

continuous production, of
&

large abouts of standard -starting costs high (expensive machines, big factory)
⑧
using automation Prod nctS if machine -Measures profits and losses at
is down, production line
-

may stop
-

differentlevels of

Sremmuhasuateanyfocusing
⑧
-

production.
⑧

F l ow production.
Continuous
-

Margin of
safety.
made, difference between mass? Flow is that
many being
identical products
. production and eliminate costs of
productivityare production line is keptr unning 24/7 to maximise
The process is
highly
automated and only few workers needed.
starting stopping production.
Lowercostentered (labour Financial ratio that measures the amountof sales that exceed the
·

costs down) Advantages. break-even

point. the revenue earned after
·

reduce overall costs

-

High number ofp roducts made

low
at cost
all fixed costs company pays variable
-

Possibly increasing sales associated with producing the goods or services. Amountof sales
company
profitability
·

increased takes time. a

production doesn'ts tart 3 stopwhich
-Time saving afford to lose before its tops being profitable.
-

can
·

improved competitiveness

Why do business hold

inventory. Factors
affecting which method of Formula.
·

meetvariationsincustomer
demand the production should be used.
Actual Output -
Breakeven=
margin of safety
demand Margin of safety (units) xContribution cost per unit =
profit
seasonal cyclical
The natureoftheproductuniqueproductsrequiresofproductionthe
-
Smooth or

Pricing priceisunt stive of

safety- PROFIT!
·

margin
increase production is used butproducts with aloto f
Hedge againstprice Consumers require mass. of
C-Cve safety-LOSS!
-

-take advantage of quantity discounts

the nature of demand: small margin
·
process 8 3 infrequentdemand
supply surprises means job or batch production is by customers
Diseconomies of
-Internalupsetsinpartsofown processes ·
the size of business:small
used.

business tend to use

job batch production
Economies? scales.
while Economies of of scale.
inventory. large business may use flow production scale. Diseconomies
too much
Holding ·
the nature of firm itself:small
firms mightnothave money factors thatlead to reduction when business is too
large, it becomes less
·
money waste on storage/warehouse invest in capital required for mass production.
to
in
average cost as a business
efficientleading to
higher costs ofproduction

productlife expirydatesould've been technology

increases in size.

YamnienYan*ere
·

used on smith more useful in What does in the

·
Handling cost Thesecondsomeese accurate mags in
large firms.

production process.
Hold too less inventory firms able
keananeersteegacma"" customers

materials used
large
inraw
are

loyal customer is
iuomastiothioneandmenoneontoeachYne?Omuraredbynumene
valued by management
. unsatisfied
customers loss of -workers feel unimportant, and not
·

thisleasthowefficientout
·
Financial economies:
·

.
Loss of
provide
profit
oppurtunity for competitor to take over the market
largefirmsabletonegotiate * Business should divide into
we are

smaller units thatc ontrol

CAM (computer aided ·Managerial economies:
manufacture):computers
Buffer stock. 3 efficiently
control machines themselves communicate to avoid
any
large businessescan affordthe
in re
production process. diseconomies
rising.
-> Extra supplies/products o its always available to sell. (computer
CIM
integrated manufacture): increases
efficiency.
CADY CAM used
together
>Safety stock -

inventory to deal with customer demand or incase computer

using CAD is linked with one that
controls
·technical economies:Marketing economies:
production
suppliers don'tgive
osrotsspecialistmachinery-buyingunvenciestodistributethe
material on time. ·
EPOS (electronic pointo fsale):when product
productbarcode is
production.
scanned
Lean and info is printed on receipt, data is sentto number of products.
keep
control of
and increase
stock.
Notify of Shortages.
efficiency
4.3)
used to cutw aste

Achieving Quality Production.

-techniques and
EFTPOS [electronic fund transfer
·

allows business to be responsive to marketneeds.

is connected to
at sale):when the cash
p ointof

minimises activities
register the retailers main
cuts out or thatdoesn'tadd value to the computer banks.
-

the
customer's card is debited from

inGenolansYeneqade lmseanaiseand Iusedearnanisforone,riceit

production process
eg:holding stock/repairing faulty products. customers bank. assurethe
-allows to do simple things well, better, involve
employees in
receipti s printed for proof of transaction. Howcustomers are
improvementa nd avoid

Advantagesand disadvantage of
waste.
-Lookforquality, mark on productisnot
common wastes in businesses. Be anticene"to eatislowe

whatactnutorauction,
~ Good reputation achieved.
overproduction:producing too products which then costs
·
many For services, Good reputation and positive

~competitiveadvantage is
reviews

increased productivity investi n new technology good indicators of service's quality.

are
·

money to store them.

·

Boring jobs done by machine,

a
replacemento f outdated
·

waiting:goods notprocessing Quality control.

Total
Quality management.

attherangemechanomoboogy
Boosts motivation continuous improvement

·amina, reuninanasirankinNinevera onabutasaraumariyamais antar von unmg arinenanunnece

o f products and
processes

Transporting:materials being moved inefficiently baran

·

training needed to operate new

·

mean
·over processing,usingadvancedtechto dosimile store in
·
machines, skilled
Better
quality
workers PROS.
faults are found before
+
-

check costs money

I
Benefits of lean production.
Better stock control
·
expensive to train
employees

4.2) cost, Scale of Production Froghedaneneseamreturningtostamsany mostherinwomenfault gone weweresea,

motivation (moreworks
forthe eyes
Lessstorageofrawmateria
is
efficiency increased and new ideas.

store the

speedupproductionbycutting 4.4) Location decisions.

down

analysis.
as the
Break even
·

unnecessary
·

improved quality
↳
Easier
Types of Cost:
yacaanseunbeneisbute
to
·

manage existe Manufacturing Business:

.
reduced space-waste reduction, space created
Factors that affectlocation.
Fixed cost
Main of Lean Production.
·

types
Troductionenarefirm needsperisathenear rawmaterial
set
-

expense/costt hatdoesn't change with an increase/decreased in the

orweatnanentireene
number of goods/services produced/gold.
kaizen
-

·
eg:rent, salaries, utility bills, insurance,
-

property taxes.

-continuous improvement
Sworkers
by eliminating waste
meet
regularly to discuss problems I possible solutions
variable changes in proportion with production output. Variable costthe
enablityecohamaborogetteseraotherfirmWngenateareres
increase/decrease
Gwastage and reduced
efficiency improved
based on
company's production volume.
Why Business Locate in differentc ountries? Service Business:
eg:Raw materials,
4
factory floors rearranged to ensure flow ofproduction shipping costs, packaging
-

costs, production supplies.

·whereeageroef rratematerialene
is improved.
·
Total cost Factors that affectlocation.

just-in-time
customers,batterinarabeerroristicresponsortiesare
.
Fixed costs variable
-

costs total costs

-
=

items are created to meetd emand, not ·Average cost per unit
in advance of
-

need availability of GovernmentG rants

-technologyservices online,canlocate anywhere
is
·

ofacts produced
S focus
reducing
on the need to hold stock
o f raw material
- ·
avoid trade barriers and tariffs
number
creduced
storage costs Role of Legal retailerBusinessation.
controls on location
↳ reliable suppliers needed ·
Directc osts Factor
decisions.
coststhatareneedto
↳ raw materials must
-

delivered just-in-time for

expandter ormae reinteringareaingenerateinamonitors

be production.
encourage
business to set up and
·
cell production -

costobjectcan be product, project, etc. of

high unemploymentand under-
-
form of team working and helps ensure worker commitment ·
Indirect costs development. Grantssubsidies are giventhe
as each cell is responsible for a complete unitof work. -

costs thatc annotbe accurately

todiscouragefirmsfromsettinginareasthe
⑧

4 production splitinto teams who work on specific part linked to specific costobject

motivatesworkerstodowetonot disappointteamlookgoodto other aset natural

puti nto
beauty. Planning
place to do so.
restriction can be

↳improved customer response time

 STATEMENT IS

FactorsinSeinenadeisTon?S caresasitmutehoneyfourenntsorrectINCOME
Enj inenance. afinancial statementthatreportscompanyregionane 6.1) GovernmentEconomic Policies
·

expenses. Financial performedbusinessesis"revenues

·

proftunt
Purpose And objectives.
and expenses
through operating/non-operating activities.

Byto,art,upthemeSee
lefta fter
Time
of
money paying a ·
shows net profito r loss incurred.

imwoughuialymt uheDnisane,ate eBorseineinglabusseatturbin,Terasagas

Statement tells whether is
anen managers company
-

makingifitoutofmanagerentearerestin
motelyuodbihyemboursinSchmerere
·inarumbrainarrantini ·baNrunhimteamorfarWarareteninthe
of fire e

abusinginanorane
EXAMPLE:
land will use
eg:business buying long term
money required to pay for day-to-day finance to getm ortgage for 15-20 years

inthe
expenses, working capital

Short-term finance. falling.

Long term finance. a recession.

Finquacantnotsauceatongueterm enablecritica Finsensingfederatethendeniescanearners

on

maininourrainwarmineinaniran arrivereare
·
Capital expenditure:
·
Revenue expenditure

of
·

-money,a ompanyspendstobuy. Maintainfice asmeestcefamoneybybusinessongeneralantennae 5. 4) Statement

or andinorder toincreasethecapacityoneofficeat

Internal sources of finance. External sources of finance. financial position.

-> instead of borrowing from investors and bankers finance thatcomes from outside the business, involves increase.

your businesshas the cationofusingits ownfinance, STATEMENTOFNANCYOSITION AsSEIathave

business outside individuals (institutions are
owing money to

external finance in
Types of marketvalue

r
paymentsand freedomfrombeingaccountable
to others.
e FISCAL POLICY.

rangearenaraarme
main finan

assetsliables, tatamietnitandenerandaurrantity
#1:
Selling shares

uniwnravarianne,inherinmin nrarethe
Shares represent ownership, when someone buys shares in

I :retained profit

irveruricnstaminaasinerckanianorrewarnanewareene
#

I doesn'tneedtobe regist money

positionaretheamounts as the final
of
moment of
machinery
covernmentcan
influence economies

need the

Stand salary payable

time

ofstatement
assets Main Elements o ffinancial
#2:
Selling existing
overable Account
payable

unused
I buildingcreasefrom adee alities
EQUITY

sngeinteresterasaninner neema
re

minyewetewrenwiwenaythisbanewort
case tes
#3:
Selling inventory #4:Debt
factoring

·Seaeratwormaterialswereisitem,am!erinneYusel ininternetaninterintumersinonsetminerPayatnomineuseen
Equity
-

thisdiscouragenSeelesetsintherestingcreationtax
MONETARY POLE,O
DOES COVERNMENTSPENDING

iamhemurmunrawwalerting"
HOW

5.5) Analysis of Accounts.

price.

inanair,raw,in eirn er,inanglersinminii

Alternative sources of finance. -
I CRO-FINANCE
M CROWD-FUNDING
use of small amounts of capital from
large number of

intintrancetobemastersosf ashassmangasinres onelastaccessingin bevorsontupreinkesocietie Wachanandisyestheredesinancianetransaction statement isbrokeninterstandingoneat

a
-

or growth.

-Unemployedpeople recieve no incomes, these

nineuensrmsrynnean
isorhastakenplace identifying business is performinga set

forecasting
well the

5.2) cash flow

trends, how
evaluating
pinpointing unusual or suspicious transactions. ⑧

small-business
The ability to an
conduct in-depth accountanalysis is a basic skill every owner

should carefully develop.

and
Working Capital. raatoisnalyatioanalysfave analysis i nformation
of contained in a
company's financialin 6.2) Environmental and Ethical issues.
needitrunsince made eventhe
cash
cash.
Ratioanalysis an as its eventy.Yay offanitcompany's
financial

· Yin,in
resin
inresinrentin
and

WinBUBES se
available for the business operating
-

liquid asset immediately

to use and spend.
-
cash includes more than justthe traditional bills coins stationinthey areanythingto beinnings reduce

PROFITIBILITY
Iti s expensive to

LIVETO
-itcan consisto f other currencies, and undeposited big thing

soyou can focus

on the the

chequesand amountsinacurrentamountsare
-payforrunningexpenses likestock,rawmaters
positive cash flow is preffered
in
parationforemployeespsupplierpay debtset profitability ratios are used todetermineterror
shows the
ability of the
Short-term debts. If a business
company to
pay back it's
see doesn'th ave the

profitabilitymeasure areimportant smallless

mingasterwashingechroitaoochrysotileisarsen
CASH -
FLOW CASH OUTFLOW.

intotalamountof moneybeingtransferredthe hisbabythenmonasinGonontaos fbusinessophratee

et

CAySoNyFhNeved bycompany iuihehisompirantintesI,rwinhautruynteheirouw snee

·sairnnerinthe . ·
due t o
-

Purchasing stock/inventory
-

geenhigheset sburningmeanar angment

-

currentassets are there in proportion

-

to
every
Exampleon capital employed in
Financing
-

aretaloniltynghereaserent
investments ratio the betterr e
-

sale of asset

Gainnewsanamekomuaythewiterargefiantlablichhast ?iety" profitabilityratiothatmeasureitshow of

CASHFLOW CYCLE. CASHELOW FORECAST.

itscapitalemployedbycomparing netoperatingthe

DoestoremapeorguetingapairTeontaPauseinabilitiesenoudbgeabovesabaoesnt

·ransen,orworstevenininbananawauvakumin
in
the
asmoy verinneranimalityatastes,Tennesember
-

consider
inventory

anavermanenitninterasegiant,whinycamefoot
when:
be

big
a
Gross ProfitMargin ~

-
firm does i t unpopular notillegal
o f changing methods more than costo f
cost
sales loss
-

firm sells to other business rather than consumer

asseprofit,marginper"SanztagmewasureeonfuelroutUbYea,

·in
iiiiiiiiiiii
-

companyoneencuttmanagementina" inrodein her usersof account EXTERNAL USERS

Gross Profit
MarginRevenueeast
= of goods sold
100
creditors
cash-flow Management
Example forecast.Fixing flow
shorttermcash
of
profit
Net
Margin.
Sandysionorganizationaformisteen determiningcrediteworthinsthe

vii wruenflownasone irbauwernailsar ivinginrate

or Net Profit
Margin is the Percentage of revenue

underminethecreditab"pat.e
Employment
remaining afteralloperatingexpenses,interest, assess company'sarofitableene
·

ene
b orrowed must
amount be repaid.

common stockdividends havebeen deduce the owners/shareholders.

⑧

returns herearereasonable
make su

Neti ncome:total sales-net

. oinsmenana
·
customers
profitmargin determine future decisions minta" be"s"sn"yer I

LIMITATIONS ACCOUNTS
U SING
OF

inavani gonare wanierwarneadarewebarrightwan awinnergamesbrus erl fiworan rmsare

·

pay employee wages Salaries

· en
money available fordaytoday operateabilities in
2
-
Figureoutingood franaireitthe ⑧
⑳

cash

Finestmeter
Seeable ensuretheyhave enough
-

-
cash for day the
⑧

customer deposits.
-
Paydebts
le
income,a
a
res

notes.
5.3) Profitand Income extra
statements. notes.
extra
is profit

a
What

ibin aninis
i ni n anin v i r u s
i n
profit =Sales revenue -

costs

->

->
Reducing
selling
costs

more products
e

-Ableto pay debtors, fans mortgage SinceagecariceofPraumateriaargins

or

drastical
in
I