Business (AS & A Level) · May / June 2022 · Paper 22 · Question 1

Farm Produce (FP) FP is a primary sector co-operative made up of six farms in country G. Each farm grows a range of fruit and vegetables. FP employs 26 workers across the farms and distribution centre. Each farm transports its fruit and vegetables to the distribution centre where they are packaged and sent to customers’ homes. Table 1.1 contains data about the farming industry in country G. Table 1.1: Data about the farming industry in country G • Farms producing fruit and vegetables are given an annual government grant. • Most farms are labour intensive. • The government promotes the importance of eating fresh fruit and vegetables. • Most farms are small family businesses. • Minimum wage for farm workers will increase by 10% next year. FP’s customers pay for a box of seasonal fruit and vegetables that is delivered each week. Data about the different box sizes sold by FP is shown in Table 1.2. Table 1.2: FP’s cost and price data Box size Variable cost per box ($) Allocated monthly fixed costs ($) Price per box ($) Sales in April 2022 Small 8 2000 10 400 Medium 10 2000 20 300 Large 15 2000 35 150 FP is concerned about the profitability of the small box size. It believes it should stop selling this product. 5 10 15 20 Please ensure text is fully

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