Business (AS & A Level) · May / June 2023 · Paper 21 · Question 2

Delicious Cocoa (DC) DC is a co-operative owned by cocoa farmers in country X. It has 500 workers. In 2022, DC produced 2000 tonnes of raw cocoa beans. Productivity is expected to increase by 5% in 2023. Although DC is profitable, it has no retained earnings. DC focuses on the triple bottom line as its main objective. The members of the co-operative (farmers) are motivated within the current operation. Zara, the Managing Director, has recently completed a workforce plan. She has identified that young people do not want to work on DC’s farms. Their concerns are: • lack of investment in training • most of the work is manual • lack of control over earnings. Ranjit, the Operations Director, has identified an opportunity to create added value by investing in a capital intensive factory. The factory will process raw cocoa beans produced by DC’s farms into cocoa butter. Cocoa butter is a premium product and attracts higher profit margins than raw cocoa beans. The processing factory will require a significant capital investment (see Table 2.1). Table 2.1 Data for the cocoa processing factory $ Initial investment: Land Machinery Training 100 000 150 000 15 000 Average variable costs per tonne 5 000 Average selling price per tonne 10 000 5 10 15 20

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