5.4. Costs
A subsection of Business Studies, 9609, through 5. Finance and accounting (AS Level)
Listing 10 of 47 questions
Car Wash (CW) CW is a national chain of car wash businesses. Each car wash is a franchise of CW and is owned and managed by an entrepreneur who is local to the area where the car wash is based. As well as washing cars, each CW franchise offers customers the opportunity to have the interiors of their cars cleaned for an additional payment. Every entrepreneur who wants to set up a CW franchise must present a plan to CW for the business, including market research information. An entrepreneur called Palesh has recently submitted a proposal for a new franchise in a town that does not currently have a CW car wash. Palesh selected a sample of people on the main street in the town to carry out his market research. He asked them about how often they would use the car wash service and how much they would be willing to pay. Based on his market research, Palesh has forecast the cash flow for the first two months of trading (see Table 1). Palesh will have an opening balance of $10 000 at the start of Month 1. Table 1: Cash flow forecast Month 1 ($) Month 2 ($) Cash inflow 20 000 20 000 Cash outflow 25 000 10 000 CW car washes are labour intensive businesses. Employees work outside and they often get very wet from the water used. Each car is washed by two employees, one for the wheels and one for the rest of the car. A third employee is responsible for cleaning the interior of the car if this is required by the customer. Palesh plans to employ 12 employees to work in shifts at the car wash. The opening hours will be 06:00 until 22:00, seven days a week. Palesh is aware that he will need to keep costs low, so he will pay each employee a low hourly wage. However, he is also aware that this may lead to human resource problems. Define the term ‘franchise’ (line 1). Briefly explain the term ‘entrepreneur’ (line 2). Refer to Table 1 and any other relevant information. Calculate the forecast closing balance at the end of Month 2. Explain one benefit for Palesh of producing a cash flow forecast. Analyse one advantage and one disadvantage to Palesh of how he carried out his market research. Recommend how Palesh could motivate his employees.
9609_w17_qp_21
THEORY
2017
Paper 2, Variant 1
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Questions Discovered
47