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Transcription of this question: 2.KiarKlar is a factory that bottles mineral water for use in large water dispensers. The factory is locatedon a hill next to a spring from where water flows naturally. Klar uses a flow production method witha production capacity Of 35 million litres per year. Klar has a share of the national market andalso exports bottled mineral water to several countries.A multinational company called Kaiser is interested in acquiring Klan “If the acquisition takesplace, we will expand Klar’s production to gain economies Of scale; we will also add a new rangeOf flavoured drinks that will be produced in batches and sold in I .5 litre bottles. Our maximumproduction capacity Of flavoured drinks will be 3 million bottles a year,” says Roman Hitschfeld,Kaiser’s Production Manager.The forecast costs for producing Klar’s new flavoured drinks are as follows:variable cost per bottle: SOA• estimated sales price per bottle: S I• fixed costs:Klar is facing fierce competition from Other companies that use plastic bottles and Offer lowerprices to consumers. Although the cost Of glass bottles is higher than plastic ones, up untilnow Klar has only used re-useable glass bottles to support its ethical objectives Of beingenvironmentally-friendly Now, Klar is considering switching from re-useable glass bottles to nonre-useable plastic ones. The environmental pressure group Plastic NO More! is campaigning againstthe use Of plastic. A spokesperson from Plastic NO More! said: “there is a growing trend amongconsumers to purchase products that will not damage the environment, but we are still a minority”(i)(ii)Define the term pressure group.Describe the production method known as batch production.(b)(c)(d)Calculate for Klar’s new flavoured drinks (show all your working):(i) the break-even level Of output.(ii) the margin Of safety if it operates at full capacity.(iii) the profit or loss if it operates at full capacity.Construct a fully labelled break-even chart for Klar’s new flavoured drinks.Analyse one advantage and one disadvantage for Klar Of having ethicalobjectives.[2 marks][2 marks][2 marks][2 marks][2 marks][5 marks][5 marks]

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