Question

Question 1

Stilvan always wanted to run his own business. When he left school he
borrowed money from his parents to start a gardening business. The
business name is Stilvan Grass Cutters. Stilvan bought some equipment
to cut grass and trees. Stilvan delivers leaflets to people's homes to
promote his business.
Table 1 shows data for a typical week for Stilvan's business.
Table 1
Average price per customer $15
Variable cost per job
$7
Weekly overheads
$320
Number of customers
50
Demand for his services is seasonal and this causes problems for Stilvan.
(a) Identify two objectives that Stilvan might have had when he set
up his business.
[2]
(b) Identify two advantages of using leaflets as a method of promotion.
[2]
(e Using the information given in Table 1, draw a break-even chart
for Stilvan's business.

Answer 1

Stilvan's business objectives likely include profitability and market share; leaflets are a cost-effective and targeted promotional method. The break-even chart reveals that Stilvan needs to serve at least 40 customers a week to cover his costs.

Step-by-step explanation:

When Stilvan set up his business, Stilvan Grass Cutters, he likely had multiple objectives, including achieving profitability and gaining market share within his local area. As for the advantages of using leaflets for promotion, they are cost-effective and can target a specific local audience directly.

To draw a break-even chart for Stilvan's business, we need to calculate the break-even point. The fixed costs are $320, and he serves 50 customers a week. The variable cost per job is $7, and the average price per customer is $15. The contribution margin per customer is the price minus the variable cost, which is $15 - $7 = $8. The break-even point in units is the fixed costs divided by the contribution margin per customer: $320 / $8 = 40 customers. Therefore, Stilvan must serve at least 40 customers to break even. Any number of customers beyond 40 will be his profit zone

Answer 2

Stilvaton 10:ind:sine29

Step-by-step explanation:

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