Suliman owns a small business which sells t-shirts on its website. He operates as a sole trader. Suliman is analysing data for his existing business. An extract from this data is shown in Table 4.1. Suliman wants to open his first shop and needs to decide on a suitable location. He is considering which type of sales promotion to use for the new shop. Table 4.1 Extract from Suliman’s data for his existing business 500 t-shirts Break-even output 550 t-shirts Current sales $3.99 Selling price per t-shirt $1.99 Variable cost per t-shirt Define ‘break-even output’. Calculate the margin of safety. Show your working. Working: Final answer: Outline two methods of sales promotion Suliman could use for the new shop. Method 1: Method 2: 1 14 Explain two factors Suliman should consider when deciding on a suitable location for the new shop. Factor 1: Explanation: Factor 2: Explanation: Do you think operating as a sole trader is the best type of organisation for a small business? Justify your answer. 1 14

0450_m24_qp_12

THEORY

2024

Paper 1, Variant 2

View

Gabby is the production manager at a factory that manufactures a range of electrical products including televisions. The company uses flow production methods in its factory. Gabby was looking at some data produced by the finance department. This data is shown in Table 1. Table 1: Cost and Output Data Output per week Fixed costs [$000’s] Variable costs [$000’s] Calculate the cost per unit if the output of the factory is 3 000 units per week. Identify two economies of scale that the factory might gain by increasing its weekly output. Economy of scale 1: Economy of scale 2: The factory uses flow production methods. Identify and explain two features of flow production. Feature 1: Feature 2: Rather than making components, Gabby’s company is going to buy them from another manufacturer. Identify and explain three advantages to Gabby’s company of doing this. Advantage 1: Explanation: Advantage 2: Explanation: Advantage 3: Explanation: Recently Gabby’s company has become much larger. Do you think that becoming larger is an advantage for a business? Justify your answer.

0450_s10_qp_11

THEORY

2010

Paper 1, Variant 1

View

Akbar Metal is a private limited company. It manufactures parts for the bicycle industry. Workers are paid by piece rate. 60% of the company’s products are sold to one customer. Akbar Metal plans to introduce flow production to meet increased demand. ‘It’s a good idea’ says the Production manager. ‘We will need to buy new machinery. This should lead to cost savings. We need to decide which source of finance to use.’ What is meant by ‘piece rate’? Identify two possible cost savings for Akbar Metal of using new machinery. Cost saving 1: Cost saving 2: Identify and explain two possible advantages to Akbar Metal of selling 60% of its products to one customer. Advantage 1: Explanation: Advantage 2: Explanation: Identify and explain three possible problems of flow production for businesses like Akbar Metal. Problem 1: Explanation: Problem 2: Explanation: Problem 3: Explanation: Explain two suitable sources of finance for the purchase of new machinery. Recommend which source Akbar Metal should use. Justify your answer. Source 1: Source 2: Recommendation:

0450_s13_qp_13

THEORY

2013

Paper 1, Variant 3

View

Gomez is the manager of a small computer repair business. Table 1 shows some costs and prices for his business. As it is a competitive market, Gomez knows it is important to maintain customer loyalty and revenue. Gomez knows that a lower break-even point would help improve profits. He thinks the best way to lower the break-even point is to raise prices. Table 1: Cost and price information Price per customer $30 Variable cost per customer $20 Average number of customers per month Monthly fixed costs $1000 What is meant by ‘revenue’? What is meant by ‘variable cost’? Using the information in Table 1, draw a break-even chart for Gomez’s business. costs and revenue ($ per month) number of customers per month Identify and explain two methods that Gomez could use to maintain customer loyalty. Method 1: Explanation: Method 2: Explanation: Gomez thinks the best way to lower the break-even point is to raise prices. Do you agree? Justify your answer.

0450_s15_qp_11

THEORY

2015

Paper 1, Variant 1

View

CYN makes a range of children’s toys. CYN’s revenue has increased by 15% a year for the last 10 years. In 2018 CYN’s total revenue was $900000. The Managing Director said: ‘The toy market is becoming increasingly competitive in country J. I never expected the rate of growth to be so high. CYN cannot meet demand and we have decided to stop all marketing promotion for 6 months.’ The Managing Director wants CYN to spend more time on developing new products. wholesalers 35% direct to retailers 55% exports 10% Figure 1: Percentage value of CYN’s revenue in 2018 What is meant by ‘wholesaler’? Calculate the revenue from selling direct to retailers in 2018. 1 9 Identify and explain how each of the following might affect CYN’s exports. Introduction of import quotas in other countries: Explanation: Introduction of import tariffs in other countries: Explanation: Identify and explain one advantage and one disadvantage to CYN of developing new products. Advantage: Explanation: Disadvantage: Explanation: [ 1 9 CYN has decided to stop all marketing promotion for 6 months. Do you agree with this decision? Justify your answer. 1 9

0450_s19_qp_13

THEORY

2019

Paper 1, Variant 3

View

MLC makes motorcycles. The Managing Director has been analysing MLC’s costs. An extract of this information is shown in Table 2.1. To reduce average costs, MLC plans to close its factory and relocate production to another country. Only 50 of the existing employees will be offered jobs at the new location. The trade union has been informed. All the new employees will be given either on-the-job training or off-the-job training. This planned relocation will have an impact on MLC’s income statement. Table 2.1 Cost and other information for MLC’s current factory (2019) Total output $1200000 Total cost Number of employees Define ‘trade union’. Calculate the average cost of one motorcycle. Show your working. State four features of an income statement. Feature 1: Feature 2: Feature 3: Feature 4: 1 13 Explain two possible problems for MLC of relocating its operations to another country. Problem 1: Explanation: Problem 2: Explanation: Do you think on-the-job training is a better method of training for a manufacturing business to use than off-the-job training? Justify your answer. [ 1 13

0450_s20_qp_12

THEORY

2020

Paper 1, Variant 2

View

RVC uses batch production to manufacture a large range of products including soap and shampoo. Many of the products are at different stages of the product life cycle. The Marketing Director has been reviewing some data for one brand of soap, as shown in Table 2.1. She said: ‘Last year sales were 80000 units a week. I want to know the current level of profit and margin of safety.’ The Marketing Director has to decide on a suitable extension strategy. The choice is between new packaging or targeting new markets. Table 2.1 Cost, price and sales data for one brand of RVC’s soap $2.50 Selling price $20000 Fixed costs per week $0.90 Average variable costs Number of sales per week Define ‘margin of safety’. Identify two stages of the product life cycle. Stage 1: Stage 2: Using Table 2.1, calculate the weekly profit. Show your working. 1 12 Explain one benefit and one limitation to RVC of using batch production. Benefit: Explanation: Limitation: Explanation: Do you think targeting new markets is a better extension strategy than new packaging for a manufacturing business ? Justify your answer. [ 1 12

0450_s20_qp_13

THEORY

2020

Paper 1, Variant 3

View

GHT is a public limited company. It produces steel products including gates and garage doors. GHT has a flat organisational structure and a short chain of command. GHT has many stakeholder groups including 600 employees. The Managing Director is considering introducing job rotation to improve employee motivation. He has also been analysing some financial data. An extract is shown in Table 3.1. Table 3.1 Extract of revenue and cost data for one of GHT’s products (product 30000 Units sold in 2020 $100 Price per unit $60 Variable costs per unit $900000 Fixed costs Break even output Define ‘fixed cost’. Calculate the margin of safety for product X in 2020. Show your working. 1 12 Outline two advantages to GHT of having a short chain of command. Advantage 1: Advantage 2: Explain one advantage and one disadvantage to GHT of using job rotation to improve employee motivation. Advantage: Explanation: Disadvantage: Explanation: [ 1 12 Do you think the shareholders are the most important stakeholder group to the success of a limited company? Justify your answer. 1 12

0450_s21_qp_12

THEORY

2021

Paper 1, Variant 2

View

CTF is an ethical business. It manufactures a range of toys. CTF operates in a competitive market. Over the years technology has changed production at CTF. The Operations Manager is analysing break-even information. An extract of the cost and revenue data for product X is shown in Table 3.1. Following the closure of its local supplier, the Operations Manager is considering importing raw materials for product X. Table 3.1 Cost and revenue data for product X in 2020 $210000 Fixed costs $25 Variable cost per toy $40 Price per toy Output Define ‘ethical business’. Calculate the total variable cost for product X. Show your working. 1 12 Outline one benefit and one limitation to CTF of using break-even analysis. Benefit: Limitation: Explain two ways that technology might have changed production at CTF. Way 1: Explanation: Way 2: Explanation: [ 1 12 Do you think reliability of the supplier is the most important factor for a large manufacturing business to consider when deciding whether to import materials? Justify your answer. 1 12

0450_s21_qp_13

THEORY

2021

Paper 1, Variant 3

View

CTF is a public limited company. It manufactures beds using batch production. The Operations Director is using break-even analysis to calculate the margin of safety for children’s beds. An extract from CTF’s output data is shown in Table 2.1. The Operations Director wants to know how an increase in inflation might affect CTF. She knows there are many environmental pressures that a manufacturing business could respond to. Table 2.1 Extract from CTF’s output data (children’s beds per month) Break-even output Current level of output Maximum factory output Define ‘public limited company’. Calculate the margin of safety for CTF’s children’s beds. Show your working. Outline two ways an increase in inflation might affect CTF. Way 1: Way 2: 1 13 Explain two possible advantages to CTF of using batch production. Advantage 1: Explanation: Advantage 2: Explanation: Do you think manufacturing businesses should always respond to environmental pressures? Justify your answer. [ 1 13

0450_s22_qp_11

THEORY

2022

Paper 1, Variant 1

View

---