Business Studies · May / June 2020 · Paper 12 · Question 2

0450

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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 2 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) 3000 Total output (units) $1200000 Total cost 200 Number of employees

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2(a)[2]
Define ‘trade union’. Award 2 marks for a full definition. Award 1 mark for a partial definition. Group of workers who join together to ensure their interests/rights are protected [2]
Organisation which represents the workers and fights for improvements to pay and conditions [2]
Partial definition e.g. A group who fight for workers’ rights [1]
2(b)[2]
Calculate the average cost of one motorcycle. Show your working. Award 2 marks for a correct calculation: 400 Award 1 mark for correct method e.g. 1 200 000/3000 OR total cost / total output
2(c)[4]
State four features of an income statement. Award 1 mark for each relevant feature. Points might include:
Revenue
Cost of sales
Gross Profit
Profit (for the year)
Retained Profit
Expenses Other appropriate responses should also be credited. 4
2(d)[6]
Explain two possible problems for MLC of relocating its operations to another country. Award 1 mark for identification of each relevant problem (max 2). Award 1 mark for each relevant reference made to this business (max 2). Award 1 mark for each relevant explanation (max 2). Points might include:
Access to suitable employees/not easy to find employees [k] as at new site will need 150 new employees [app] increasing recruitment/training costs [an]
Access to/cost of suitable land [k] as will need a big space[an] to make motorcycles [app]
Different legal controls/standards [k] in the new factory [app] which may mean have to change how/where operate [an]
Could be further away from market/suppliers/need to find new suppliers [k] which increases transport costs [an]
Communication problems [k] as may need to learn a new language [an] so takes longer to complete on-the-job training [app] Other appropriate responses should also be credited. 6
2(e)[6]
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. Award up to 2 marks for identification of relevant points. Award up to 2 marks for relevant development of points. Award 2 marks for justified decision as to whether on-the-job training is a better method of training for a manufacturing business to use than off-the-job training. Points might include: Off-the-job training:
Not necessarily tailored to individual business [k]
Have to pay more/high cost for specialists [k] which increases costs [an]
Skills might not be available in the business [k] so benefit from new techniques/ideas [an]
Allows for mistakes to be made when learning [k] so less likely to waste resources when working/lower risk of damaging business reputation [an] On-the-job training:
Can reinforce errors/bad habits of trainer [k] reducing sales/damage reputation [an]
Fewer new ideas/skills will be taught [k]
Control what is taught/employees learn exact way business wants things done [k] so workers only learn skills needed [an]
Employees can carry on working [k] so some output is still produced [an]
Cheaper (than off-the-job) [k] Justification may include:
No, as it depends what the training is for – if using new techniques/ machines the business may not have a suitable person to train others so on-the-job is not an option so it would have no choice and would have to use off-the-job training. [eval] [eval] Other appropriate responses should also be credited. 6

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