5. Finance and accounting (AS Level)
A section of Business Studies, 9609
Listing 10 of 99 questions
Gold Theme Park (GT) Gold Park was a mine where gold was extracted until 2012. Although there was still some gold in the mine, the direct costs of extracting it became too high. The area around Gold Park has become a tourist destination. There has recently been development of hotels and other accommodation. A new marina complex has also been built which attracts boat owners to use the local lakes and rivers. Kayo is an entrepreneur who purchased the mine in 2015. She converted the mine into GT, a theme park where customers can learn about gold mining and have fun. GT now includes a museum, guided underground tours of the mine and a roller coaster ride around the park. There is also a restaurant and gift shop. Kayo employs some of the people who previously worked in the gold mine to work as tour guides in the theme park. She also employs some younger workers, who require training, as customer service representatives. Kayo believes that developing intrapreneurship is important to the ongoing success of GT. Table 1.1 shows some data about GT over the past three years. Table 1.1 Data about GT Revenue ($m) 3.4 3.2 2.8 Number of employees Profit ($m) 0.9 0.3 0.2 Number of visitors 0.8 0.8 0.65 GT’s Marketing Director has conducted some primary market research to find out why visitor numbers have fallen. The findings indicate that many potential customers think the park is not fun and the price of entry is too high. Kayo has now asked the Marketing Director to conduct some secondary market research to help improve GT. Identify one type of training. Explain the term direct costs (line 2). Refer to Table 1.1. Calculate the change in GT’s total costs between 2020 and 2022. Explain one way to measure the size of GT. Analyse two possible sources of secondary market research that the Marketing Director could use to help improve GT. Evaluate the importance to the ongoing success of GT of developing intrapreneurship.
9609_w23_qp_22
THEORY
2023
Paper 2, Variant 2
View
Move Well (MW) MW is a business that organises the transportation of people’s possessions when they move from one house or apartment to another. One of MW’s corporate objectives is to achieve internal growth. MW has expanded rapidly from a local business to a national business. It now has locations in many major cities in country Q. Local success was built on customer recommendations. National success is a result of carefully targeted advertising and effective use of social media. The growth of the business has put pressure on MW’s cash flow. MW receives payment from customers one week after the house move is completed, which is, on average, one month after the house move was booked. MW’s costs include rent, vehicle maintenance, fuel, local taxes, wages and advertising. Following some successful years, there has been a large decline in MW’s sales. This is due mainly to fewer people moving home in country Q. Each city location made a loss last year. The Managing Director, John, has noticed that the housing market is growing in some other countries. He thinks there is an opportunity for a new location in country P. Table 2.1 shows the forecast costs and revenue for the new location in country P. Table 2.1: Forecast costs and revenue for the new location in country P in year one ($000) Revenue Direct costs Indirect costs Effie, the Operations Manager, would prefer to achieve cost savings rather than expand into another country. She thinks a lot of time is wasted due to uncoordinated information systems which are not kept up to date. MW currently keeps its customer records on paper. It also has three separate computer-based systems. Table 2.2 shows details of the computer systems. Table 2.2: MW’s computer systems Computer system Process A Tracks vehicles used on each home move B Records employee pay and other HR data C Produces accounts and other management information Define the term ‘corporate objectives’ (line 3). Explain the term ‘internal growth’ (line 3). Refer to Table 2.1. Calculate the forecast profit margin for year one. Explain one method MW could use to improve its cash flow. Analyse two benefits to MW of introducing process innovation to update its information systems. Evaluate the factors that John needs to consider before opening the new location in country P.
9609_w22_qp_21
THEORY
2022
Paper 2, Variant 1
View
Jim’s Farm (JF) JF is a private limited company which owns a farm. It produces crops including maize and sunflower seeds. The crops are sold to manufacturers that produce cooking oils for supermarkets. Jim is worried as the price JF receives for its crops is falling. JF is only paid four times a year when the crops are ready, so cash flow is poor. Sam, Jim’s son, has recently completed a management degree at university. He is worried that the farm will not reach its break-even point if the price continues to fall. He has researched ways his father could increase the value added to the crops. Sam has identified that healthy eating is a growing trend. He has created a plan for the business which considers two options, shown in Table 1.1. Sam has identified that supermarkets would buy most of the new products and he could also sell them to independent retailers. Table 1.1: Options for the future of JF Option 1 Option 2 Product Healthy snacks Healthy cooking oil Market type Mass Niche Start-up capital ($000) Annual expenses ($000) Annual cost of goods sold ($000) Forecast annual market growth 10% 15% Forecast annual sales 300 000 units 100 000 units Proposed price per unit $0.50 $2.00 Figs. 1.1 and 1.2 show extracts from articles about the two options. Healthy eating campaigns in schools are changing the way that young people snack and the sales of ‘healthy snacks’ made from nuts and seeds are growing. Healthy eating is rapidly becoming an important social issue and for some consumers, quality is more important than price. : The rise of the healthy eating campaign Business analysts are excited about the potential profitability of premium cooking oils, which offer a healthy alternative to traditional products. High income consumers are prepared to pay high prices for healthy oils made by small independent producers. : Future demand for healthy cooking oil Define the term ‘break-even’ (line 6). Briefly explain the term ‘value added’ (line 7). Calculate JF’s forecast gross profit margin for Option 1. Explain one reason why JF might aim for a high gross profit margin. Recommend which option Jim should choose using the information in the case study. Justify your view. Analyse two suitable sources of finance JF could use for the option you have chosen in 1.
9609_m19_qp_22
THEORY
2019
Paper 2, Variant 2
View
Questions Discovered
99