Business Studies · May / June 2026 · Paper 11 · Question 2

0450

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OBZ uses job production to manufacture carpets. The business has 80 employees. OBZzs operations manager is considering different ways to maintain quality production in the factory. The finance manager knows OBZ needs to manage its cash. She is reviewing OBZzs financial data. An extract is shown in Table 2.1. 2 Table 2.1 Extract from OBZzs financial data at 30 December 2025 ($000) 800 non-current assets 300 current assets 240 current liabilities

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2(a)[2]
Define ‘non-current assets’. Award 2 marks for a full definition. Award 1 mark for a partial definition.
Resources owned by a business which will be used for a period longer than one year [2]
Items owned/held by a business for more than one year [2]
Assets owned for more than a year [2]
Partial definition e.g.
Items owned/bought/possessed by the business [1]
Items used/lasting for more than one year [1]
2 Notes:
Accept more than one accounting period / for one year or longer. Do not award:
Assets owned for one year
Examples of assets e.g. property
Long term
Cannot convert to cash /liquidate within one year
2(b)[2]
Calculate OBZ’s working capital. Show your working. Award 2 marks for a correct answer. Award 1 mark for correct method but incorrect answer. Correct answer: $60 000 [2]
Correct method but incorrect answer maximum [1]
e.g.
Current assets – current liabilities
300 000 – 240 000
300 – 240
60 2 If correct answer given with no working shown, award 2 marks. $ sign not required.
2(c)[4]
Outline two reasons why OBZ needs to manage its cash. Award 1 mark for each relevant reason (max 2). Award 1 mark for each relevant reference to this business (max 2). Points might include:
To pay wages/labour cost [k] of its 80 employees [app]
Pay suppliers/trade payables/raw materials/inventory [k] for materials to make carpets [app]
Pay heating bills/utilities [k] in the factory [app]
Pay rent [k]
Pay insurance [k]
Pay for advertising [k]
Pay interest (on loans) [k]
Pay (government) taxes [k]
Pay maintenance /repair costs [k]
Repay (short-term) debts/ repay loan [k] as owe $240 000 [app]
Cash available for emergency /to pay unexpected costs [k]
Predict/plan for/budget to/prevent cash flow problems/avoid going into debt [k]
Ensure business survival/continue /may be forced to close if cannot pay its debt [k] Other appropriate responses should be credited. 4 To use words from the stem as application, the reference must be appropriate (i.e. make sense) in relation to the point being made. The following words are likely to be appropriate for this question:
Carpets
Job production
Quality production
80 (employees)
Factory
$300 000 (current assets)
$240 000 (current liabilities)
$60 000 (working capital) OFR applies
1.25 (current ratio) Other appropriate examples can be credited. Notes:
Accept expenses/overheads/costs/ current liabilities if no specific examples of day-to-day costs given. Do not award:
Invest/expand/buy equipment
References to profit
Support request for loan/finance/fund start-up/source of funds
2(d)[6]
Explain two ways OBZ could maintain quality production. Award 1 mark for identification of each relevant way (max 2). Award 1 mark for each relevant reference to this business (max 2). Award 1 mark for each relevant explanation (max 2). Points might include:
Use quality control [k] where products are checked at the end of production/so defective products are not sold [an] from the factory [app]
Use quality assurance [k] where quality is checked throughout production [an] when making carpets [app]
Train/recruit skilled employees [k] as there are 80 employees [app] which could lead to less mistakes [an]
Use quality machinery/introduce new technology/automation [k] as currently use job production [app]
Use quality materials [k] therefore products last longer /are durable[an]
Continue using job production [k] Other appropriate responses should be credited. 6 To use words from the stem as application, the reference must be appropriate (i.e. make sense) in relation to the point being made. The following words are likely to be appropriate for this question:
Carpets or related words
Job production
80 (employees)
Factory
$300 000 (current assets)
$240 000 (current liabilities)
$60 000 (working capital)
1.25 (current ratio) Other appropriate examples can be credited. Notes:
Can credit the same [an] for different points but only award once.
Where products are checked at the end of production can be [k] or [an].
Where quality is checked throughout production can be [k] or [an]. Do not award:
Continuous improvement
Improve motivation
2(e)[6]
Do you think the advantages to a business of using job production are greater than the disadvantages? Justify your answer. Award up to 2 marks for identification of relevant points. Award up to 2 marks for relevant development of points. Award up to 2 marks for justified decision about whether the advantages for a business of using job production are greater than the disadvantages. Points might include: Advantages:
Meet exact customer requirements / customized / specialised products [k] which increases customer loyalty/sales [an]
Unique/one-off/specialised products/USP[K] can charge higher price[an]
High-quality goods/services[k] which could lead to better brand image[an]
High motivation (of employees) [k] as some variety to work [an] few workers leave / less absenteeism [an]
Can charge high prices [k] which could increase profit margin [an] Disadvantages:
Products made to order/can take long time to make [k] so low output/ so mistakes can be expensive to correct [an]
No economies of scale (or examples) [k] increasing average/unit cost [an]
Skilled labour is needed [k] increases labour/training costs [an]
Labour intensive [k] Other appropriate responses should be credited. Justification might include: Job production allows the business to meet customer requirements [k] which can increase customer loyalty [an]. However, there are no economies of scale [k] leading to higher unit cost [an]. The advantages are greater because if customers get exactly what they want they may pay a higher price [eval], covering the higher costs involved in making the product. [eval] 6 This is a generic question so there are no marks for application. To access evaluation must refer to an advantage and disadvantage. For evaluation to be awarded justification will usually follow on from relevant analysis of points. Notes:
Some points can be [k] or [an] but do not award the same point twice.

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