Business Studies Paper 11

Oct / Nov 2019·7115·4 questions

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Question paper

Question 1

Question 2

Question 3

Question 4

Mark scheme

Question 1

1(a)[2]

What is meant by ‘income statement’? Clear understanding [2]: A financial document that records the revenue, costs and profit for a given period of time. Some understanding [1]: Shows revenue and costs / shows profit

1(b)[2]

Identify the effect of an increase in the cost of materials on each of the following:

Cost of sales: increase costs

Gross profit: decrease gross profit

Award 1 mark per effect identified.

1(c)[4]

Identify and explain two ways in which BFF’s managers could use information contained in the income statement. Knowledge [2 × 1] – award 1 mark for each way.

Application [2 × 1] – award 1 mark for each explanation in context. Points might include:

Able to calculate the profitability ratios [k] to see the effect of the increase in material costs [app]

Helps assess efficiency [k] to see benefit from advances in technology [app]

Able to compare performance with similar businesses [k]

Able to compare performance between different time periods [k]

Show shareholders / owners how business performed [k]

It is used to measure business success / decide if the business should continue trading [k]

Used to support an application for a loan [k]

1(d)[6]

Identify and explain two ways changes in technology used in production could help BFF to remain competitive. Knowledge [2 × 1] – award 1 mark for each relevant way. Application [2 × 1] – award 1 mark if relevant reference made to this business.

Analysis [2 × 1] – award 1 mark for each relevant explanation. Points might include:

Machines replace labour [k] helping improve its income statement [app] so less wages need to be paid [an]

Wider range of products [k] such as screens [app] to appeal to more customers or markets [an]

Able to produce more / improved productivity / more efficient [k] so able to lower prices [an] and compete with imports [app]

Technology improves flexibility [k] so the business can react to changes in demand [an] for computers [app]

Reduces waste / less errors / consistent quality [k]

1(e)[6]

Do you think BFF should increase its prices? Justify your answer.

Knowledge [1] – award 1 mark for identification of relevant point(s) Application [1] – award 1 mark for a relevant reference made to this business

Analysis [2] – award up to 2 marks for relevant development of point(s)

Evaluation [2] – justified decision made as to whether BFF should increase its prices.

Points might include:

Could increase revenue [k] so more money available to cover costs [an] such as increase in material costs [app]

Could lead to fewer customers [k] as higher price could encourage customers to switch to competitors [an] so difficult to remain competitive [app]

They need to increase prices to cover cost [k] because of the increase in material costs [app]

Gives an impression of quality [k]

Keeping prices low may increase market share [k] because it is a competitive market [app] as lower price attracts customers [an]

Question 2

2(a)[2]

Identify two stages of the business cycle. Award 1 mark for each stage identified. Stages: Growth, boom, recession, slump.

2(b)[2]

What is meant by ‘redundancy’? Clear understanding [2]: e.g. job position has gone and so the employee is no longer required Termination of employment because the job is no longer needed Some understanding [1]

e.g. loses job (through no fault of their own) [1]

or job role has gone [1]

For 2 marks must clearly understand idea that it is the role that no longer exists Do not award reasons why the job may no longer exist Notes

2(c)[4]

Identify and explain two ways a trade union could help WKN’s employees. Knowledge [2 × 1] – award 1 mark for each way identified Application [2 × 1] – award 1 mark for each explanation in context Points might include:

Negotiate or help improve pay [k] for shop employees [app]

Improved working conditions or health and safety [k] in head office [app]

Gives strength in numbers/collective bargaining so more likely to achieve demands [k] when dealing with head office [app]

Take action (strikes/protests) [k] to prevent redundancy [app]

Provides services such as insurance / training / social activities / discounts [k]

Resolve conflict between employer and employees [k]

Advice / legal support [k] 4 Application marks may be awarded for appropriate use of the following:

retailer

household goods OR plates OR brushes

challenging stage of business cycle

marketing department OR head office

1800 OR redundancy

200 OR shops

profit fell 80% OR $5m

100 new jobs Notes

2(d)[6]

Identify and explain two advantages to WKN of maintaining customer loyalty. Knowledge [2 × 1] –award 1 mark for each relevant advantage Application [2 × 1] – award 1 mark for each relevant reference made to this business Analysis [2 × 1] – award 1 mark for each relevant explanation Relevant points might include:

Increase sales [k] of its household goods [app]

Easier to match products to existing customer needs [k] so know what to stock in its shops [app] reducing wastage [an]

Maintain competitiveness [k]

Current customers recommend products [k] so less promotion needed [an]

Cheaper than trying to attract new customers [k]

Reputation / brand image improves [k]

May be able to increase prices and keep customers [k]

Provides a sense of security for owners [k] 6 Application marks may be awarded for appropriate use of the following:

retailer

sells household goods OR plates OR brushes

challenging stage of business cycle

marketing department OR head office

1800 OR redundancy

200 OR shops

profit fell 80% OR $5m

100 new jobs

trade union Do not award ways to increase customer loyalty Notes

2(e)[6]

Do you think WKN should select all the workers for the new jobs from those about to be made redundant? Justify your answer. Knowledge [1]

– award 1 mark for identification of relevant point (s) Application [1]

– award 1 mark if relevant reference made to this business Analysis [2]

– award up to 2 marks for relevant development of point(s) Evaluation [2]

– justified decision made as to whether WKN should select the workers for the new jobs from those facing redundancy Points might include:

Do not need to advertise jobs externally [k] so lower (recruitment) costs [an]

Know abilities and skills of employees [k]

Existing employees have good knowledge of customer requirements [k] as have experience of working in its shops [app]

Workers might not have skills [k] which could lead to poor work [an] reducing customer loyalty [app]

May not want or be able to move locations [k] to head office [app] so few employees will want to apply [an]

Recruitment of new workers will bring fresh ideas [k] 6 Application marks may be awarded for appropriate use of the following:

retailer

household goods OR plates OR brushes

challenging stage of business cycle

marketing department OR head office

1800

200 OR shops

profit fell 80% OR $5m

100 new jobs

trade union

customer loyalty The analysis must relate to the impact upon the business rather than the employee Do not award answers which discuss how the candidates are selected for redundancy Notes

Question 3

3(a)[2]

What is meant by ‘fixed costs’? Clear understanding [2]

e.g. costs that do not change [1]

as the level of activity / output / sales changes [1]

Costs which have to be paid whether the business produces any products or not Some understanding [1]: e.g. costs that stay the same 2 Do not award examples as this does not explain the term.

3(b)[2]

Calculate the forecast revenue per week for the new café. Good application [2]: $1300 Some application [1]: 325 × 4 OR number of customers × average spend (price) 2 $ sign not needed to award full marks Notes

3(c)[4]

Identify and explain two advantages to Keila’s business of using free samples as a method of promotion. Knowledge [2 × 1] – award 1 mark for each advantage identified Application [2 × 1] – award 1 mark for each explanation in context Points might include:

Increases awareness of her products [k] with tourists [app]

Encourages customers to try her products [k] and visit the café [app]

Tempt customer to buy more [k] helping her remain successful [app]

Way to get feedback [k] so she improves her cakes [app]

Can test out new product ideas [k] identified from research [app]

Customers understand the quality of the product [k]

3(d)[6]

Identify and explain one advantage and one disadvantage to Keila’s business of using primary market research. Knowledge [2 × 1] – award 1 mark for a relevant advantage / disadvantage

Application [2 × 1] – award 1 mark for each relevant reference made to this business

Analysis [2 × 1] – award 1 mark for each relevant explanation Relevant points might include:

Advantages:

Up-to-date [k] so able to make more accurate decisions [an] such as whether to open the café [app]

Specific to her purpose [k]

Information is not available to other competitors [k] so may provide a competitive advantage [an] for this small shop [app] Disadvantages:

High cost [k] to find out views on her bakery [app] which will increase her expenses [an]

Takes long time to collect [k]

Can be bias in questions or how questions are asked [k] leading her to make the wrong decisions [an]

3(e)[6]

Do you think Keila should open the new café? Justify your answer using the information in Table 1.

Knowledge [1] – award 1 mark for identification of relevant point(s) Application [1] – award 1 mark for a relevant reference made to this business

Analysis [2] – award up to 2 marks for relevant development of point(s)

Evaluation [2] – justified decision made as to whether Keila should open the new café

Points might include:

She expects to attract enough customers to cover her fixed costs [k] as she predicts 325 [app]

TR – TC [k] $1300 [app] – $1150 [an] leaving a profit of £150 [an]

TVC = VC x Output [k] $2 × 325 [app] = $650 [an + an]

TC = TFC + TVC [k] $500 + $650 [app + an] = $1150 [an + an]

Has relevant business experience [k] as runs a successful bakery [app]

Spreads risk [k]

Cost of shop and labour to run the café [k]

How reliable is the data gathered [k] from her primary research [app]

Does she have time / finance to run both businesses [k]

Question 4

4(a)[2]

What is meant by ‘span of control’? Clear understanding [2]: Number of subordinates working directly under an individual OR manager Number of subordinates reporting to each supervisor / manager Some understanding [1]: E.g. number of subordinates working under an individual OR manager Who you are responsible for 2

4(b)[2]

What is meant by ‘uses specialisation’? Clear understanding [2]: E.g. way in which work is divided so each worker concentrates on a specific task so become expert at it When people or business concentrate on what they are best at Some understanding [1]: E.g. workers only do one job 2 Notes

4(c)[4]

Identify and explain two possible reasons why VXH has grown quickly. Knowledge [2 × 1] – award 1 mark for each reason identified Application [2 × 1] – award 1 mark for each explanation in context Points might include:

Closure / takeover of competitor [k] so fewer businesses making soft drinks [app]

Changes in customer tastes / fashion [k]

Spotted a new opportunity in the market [k]

Change in legal controls / rules [k]

Introduction of new technology [k] so able to take advantage of specialisation [app]

Increase in productivity [k] Application marks may be awarded for appropriate use of the following:

fruit or related words e.g. flavours

soft drinks

batch production

specialisation

factory

40 OR 80 (workers)/motivation problems

job rotation or financial bonus

2 years

Span of control (increased) Notes

4(d)[6]

Identify and explain two possible reasons why VXH uses batch production. Knowledge [2 × 1] – award 1 mark for each relevant reason Application [2 × 1] – award 1 mark for each relevant reference made to this business Analysis [2 × 1] – award 1 mark for each relevant explanation Relevant points might include:

Allows variety of products to be made [k]

Flexible [k] as able to change product easily to meet changes in customer demand [an] for different flavours [app]

Provides some variety of jobs to workers [k] helping improve employee motivation [app] so fewer employees might leave [an]

Allows use of specialist skills [k] so able to take advantage of specialisation [app] to increase output [an]

Level of demand does not justify the use of flow production [k]

Since larger numbers are made [k] lower unit costs [an]

Production not affected if machinery breaks down [k]

Buying in bulk [k] 6 Application marks may be awarded for appropriate use of the following:

fruit or related words e.g. flavours

soft drinks

specialisation

factory

40 OR 80 (workers) / motivation problems

job rotation or financial bonus

2 years

Span of control (increased) Notes

4(e)[6]

Do you think VXH should use job rotation or financial bonuses to increase employee motivation? Justify your answer. Knowledge [1]

– award 1 mark for identification of relevant point(s) Application [1]

– award 1 mark for a relevant reference made to this business Analysis [2]

– award up to 2 marks for relevant development of point(s) Evaluation [2]

– justified decision made as to whether VXH should use job rotation or financial bonuses to increase employee motivation Points might include: Job rotation:

Prevents workers becoming bored doing the same task repeatedly [k] which could increase output [an]

Need to provide training [k] to the 80 employees [app] which increases cost [an]

Helps improve flexibility [k] as workers can switch if someone is absent [an]

Workers may not be good at the new task [k] so productivity decreases [an] 6 Application marks may be awarded for appropriate use of the following:

fruit or related words e.g. flavours

soft drinks

batch production

specialisation

factory

40 OR 80 (workers) motivation problems

2 years

Span of control (increased) Notes Financial Bonus:

Increases costs to the business [k]

Some employees may not be motivated by money [k]

Can lead to conflict / demotivation if some workers don’t get this [k]

Business Studies Paper 11

Question paper

Question 1

Question 2

Question 3

Question 4

Mark scheme

Question 1

Question 2

Question 3

Question 4

Questions in this paper