what does "Economies of scale in production" mean?
topcat
Registered Posts: 452
Was going through a fininical performance practice exam and one part to the written answer was this but i have no idea what this part means "Economies of scale in production" meswell be in Chinese
.Anyone have any ideas?:confused1:
.Anyone have any ideas?:confused1:
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It just means that you can sometimes make savings if you produce in large quantities. Eg. You may be able to buy materials with a bulk discount, or it might be quicker to make one batch of 10 rather than 10 batches of 1. In other words, the unit cost price of each item may fall, the more you make in one go. The Learning Curve is a theory that allows you to calculate how much labour time is reduced by as the workers get more skilled in that procedure. There are formulae to work it out but I don't think that's covered in AAT.0
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It just means that you can sometimes make savings if you produce in large quantities. Eg. You may be able to buy materials with a bulk discount, or it might be quicker to make one batch of 10 rather than 10 batches of 1. In other words, the unit cost price of each item may fall, the more you make in one go. The Learning Curve is a theory that allows you to calculate how much labour time is reduced by as the workers get more skilled in that procedure. There are formulae to work it out but I don't think that's covered in AAT.
thanks NPS brilliant explanation as always :001_smile:0
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