Revenues, costs & profits

Item C: Charlie Paul

State one method of good customer service.

Using Item C, explain one way in which CP focuses on sustainability.

The shopping centres that CP operates in are very busy. CP offers customers free services, such as gift wrapping and beauty demonstrations.

Analyse how CP might benefit from good customer service.

Item D: Charlie Paul

Employees receive 15% commission on the sale of extras.

Using Table 1, calculate the average daily commission paid by CP on key rings.

Show your workings.

Using Item D, calculate the daily wage costs of operating the Santa’s Grotto.

Show your workings.

The commission on extras is shared between all employees of the Grotto.

Explain one benefit of using commission to pay the Grotto employees at each CP store.

CP uses a range of technologies to communicate with customers.

Analyse how CP will benefit from the use of digital technology.

Item E: Charlie Paul

Increasing competition from online retailers is reducing CP’s sales. A large amount of cash is needed to develop its website. CP is considering two options.

1. Converting to a Plc.

2. Reducing the cost of supplies.

Analyse the effect of each of these two options for CP.

Evaluate which of these two options will have the biggest impact on CP’s ability to maintain its current objectives.

Item C: Solar Scene Ltd

Explain one negative impact a business may have on the environment.

Telesales staff at Solar Scene Ltd have excellent technical knowledge of the solar panels and can address concerns immediately.

Explain one reason why Solar Scene Ltd uses telesales to distribute solar panels.

The solar panel market is a growing market and in 2024 grew by 40%. The average sales revenue growth of competitors is 35%.

Analyse one way that the information in Solar Scene Ltd’s income statements would help potential investors decide whether to invest in the company.

Item D: Solar Scene Ltd

Explain one benefit for a business of using market segmentation.

Solar Scene Ltd has placed an order with its supplier for 8 solar panels. The total cost of the order is £12 000.

Using the information in Item D, calculate the cost of the order once the discount has been applied.

Show all workings.

Using the information in Table 2, calculate the gross profit margin for Solar Scene Ltd for 2024.

Show all workings.

Whilst the business grows, Karl will communicate with staff through monthly, instead of weekly, meetings.

Analyse one type of diseconomies of scale that may occur if Solar Scene Ltd expands quickly.

Item E: Solar Scene Ltd

Karl wants Solar Scene Ltd to expand into the business segment of the market. He is considering two options:

1. Apply for a government grant to build a factory in the UK

2. Merge with a manufacturer in China

Analyse the effect of each of these two options for Solar Scene Ltd.

Evaluate which of these two options will have the biggest impact on the ability of Solar Scene Ltd to be competitive in the business segment of the market.

Which of the following is a benefit to an entrepreneur of operating as a sole trader?

Which of the following is a method of internal recruitment?

Which of the following describes when induction training should take place?

Which of the following is correct for a flat organisational structure?

Which of the following is the most likely effect of a decrease in interest rates?

Which of the following is an example of a fixed cost?

Explain one method of growth used by a business when expanding organically or externally.

Explain why a business uses delayering.

Explain one way a person specification can be used as part of the recruitment process.

Businesses aim to meet the needs and wants of customers. Explain the meaning of the term ‘need’ using an example.

Explain one disadvantage to a business of expanding through external growth.

Land is one of the four factors of production.

Identify and explain two factors of production other than land.

Item A: Luscious Locks by E

Explain one benefit to a business of employing workers on a part-time contract.

Elaine makes all of the decisions in the business. She rarely consults with anyone.

Analyse one drawback for LLE of Elaine’s management style.

The college course would allow John to gain an advanced qualification in the latest hairstyling techniques.

Recommend whether Elaine should allow John to attend the college course. Give reasons for your answer.

Item B: Luscious Locks by E

Explain one benefit of growth to a business.

Elaine ordered 20 organic hair treatments for £300 in total.

Calculate the unit cost of each treatment. Show your workings.

The supplier has offered a 35% discount.

Calculate the total cost of 120 organic hair treatments with this discount. Use your answer to Question 2.5 in your calculation.

Show your workings.

Elaine orders the treatments to arrive just in time for each customer’s appointment.

Recommend whether Elaine should change to just-in-case stock control. Give reasons for your recommendation.

Which of the following is true for a public limited company?

Which of the following costs is an example of a variable cost?

Which of the following statements describes job production?

If an employee changes from full-time employment to job sharing, which of the following is true?

Which of the following is likely to be an effect of delayering in an organisation?

Which statement is most likely to be correct when interest rates rise?

Identify two stakeholders of a business.

Explain one cost of maintaining quality during the production of a product.

Explain one disadvantage to a business of poor customer service.

Describe one characteristic of an entrepreneur.

Explain what is meant by ‘induction training’.

State and explain two financial methods of rewarding employees.

Item A: Xanthe’s Tech-Academy

Explain what is meant by ‘off the job’ training.

Xanthe has set a target to make 200% profit on top of costs each time the new course is run.

Two trainers will run the four-hour course with 30 people attending.

Using Table 1 calculate the selling price per person.

Xanthe believes increasing the range of courses offered will keep the business competitive.

Recommend whether XTA should introduce the new course ‘Using Web Conferencing Effectively’. Give reasons for your answer.

Item B: Xanthe’s Tech-Academy

Explain one benefit of internal recruitment.

Xanthe uses delegation to give employees greater levels of responsibility.

Analyse one benefit to XTA of using delegation to motivate employees.

Xanthe involves her employees in some decision making but she makes all major decisions herself.

Recommend whether Xanthe should create a taller organisational structure. Give reasons for your choice.

Item C: NIST cars

The factory uses flow production. Employees are specialists, trained in one specific role of the production process. All the employees have responsibility for checking if faults exist. Employees are trained to check their work thoroughly. Mistakes must be identified before a car moves to the next stage of production. The total production of a car takes 28 hours.

The factory in the UK recently won an award for being ‘The UK manufacturer of the year’. Quality standards are exceptionally high. In the last five years every car has reached the end of the production process without a fault present.

Recently the business has experienced issues with car parts. A supplier providing engine parts to NIST had to shut down for a day. As a result, NIST had to halt production of its cars for several hours. NIST orders parts from suppliers when a customer orders a car. Many suppliers are near to the factory. Some suppliers will deliver parts in less than two hours and there are frequent small deliveries throughout the day. The production of a car relies on parts arriving precisely when they are needed.

Table 3: Electric cars and changes in exchange rates

Identify one sector of production.

Using Table 3, explain one benefit for NIST of a fall in the value of the pound when selling cars in Europe.

NIST orders parts from suppliers when a customer orders a car.

Analyse one drawback to NIST of using just-in-time (JIT) stock control for parts needed to produce its cars.

In the last five years every car has reached the end of the production process without a fault present.

Analyse one benefit of using total quality management (TQM) to maintain standards in the production of cars at the NIST UK factory.

Item D: NIST cars

Using the data in Figure 1, describe what happened to global car sales from 2019 to 2021.

NIST used the graph to help forecast its profits for 2022.

Explain how information from Figure 1 may have helped NIST forecast that profits will fall in 2022.

Using Item D, explain how global demand for new cars may be affected by changes in levels of employment around the world in 2020 and 2021.

Item E: NIST cars

In the current economic climate, the selling price for a car cannot be increased. To improve profits NIST must sell more cars next year. To increase the number of cars sold NIST will be using these two options:

1. Produce the new electric car, the NIST March, at its factory in Spain.

2. Set up an e-commerce website to sell the existing Folio electric car to businesses in the UK.

Analyse the effect of each of these two options for NIST.

Evaluate which of these two options will have the biggest impact on the number of cars sold by NIST.

Which of the following is a method of secondary market research?

Which of the following describes dividing potential customers into groups based on different characteristics?

Which source of finance could be given to a business to create jobs in areas of high unemployment?

Which of the following is the correct formula to calculate the margin of safety from a break-even chart?

Which of the following types of business ownership has shareholders, but cannot advertise its shares to the general public?

Which of the following is an advantage of trade credit for a business?

Identify two factors a business will consider before deciding on the promotional mix for its product or service.

Shareholders have a key objective of profit.

Explain one reason why this might cause conflict with a different stakeholder group.

Explain one problem a business might face when producing an effective business plan.

Explain one benefit to a business of being more environmentally friendly.

Table 1 Extract from an income statement

Using Table 1, calculate the gross profit margin.

Show all workings.

State and explain two pricing methods that a business can use.

Item A: One Day Photography

Describe what is meant by the term ‘entrepreneur’.

Debbie previously worked full time from 10am to 6pm in a supermarket.

Analyse one benefit to Debbie of operating ODP as a sole trader.

Debbie is spending many hours a week updating the ODP social media account and responding to messages.

Recommend whether Debbie should continue to use social media to promote ODP.

Give reasons for your answer.

Item B: One Day Photography

Identify one current asset of a business.

Explain why a unique selling point (USP) is important to a business.

Debbie charges £180 for a family photography session. The cost to ODP for each session is £60.

Using the information in Table 2, calculate how many sessions Debbie would need each week to equal the profit from two weddings.

Show all workings.

Debbie is considering a bank loan to open a studio and upgrade her camera equipment, but she would have to use her home as security. This means that if she struggled to repay the loan the bank could force her to sell the house.

Recommend whether Debbie should use a bank loan.

Give reasons for your answer.

Item A: Premium Motors

Identify two objectives of a business.

Premium Motors has received a booking for a wedding in Manchester that requires four cars. Premium Motors will make £50 profit per car.

The costs will be as follows:

• driver £50 per car

• petrol £20 per car

• £200 payment towards fixed costs.

Calculate Premium Motors’ revenue for this booking.

Since Premium Motors started 10 years ago it has expanded slowly using organic growth.

Recommend whether Premium Motors should now take over LLC. Give reasons for your recommendation.

Item B: Premium Motors

Explain one economic change that can affect a business.

Janet is considering introducing a new induction training programme for the new drivers to ensure a high level of customer service.

Analyse one benefit of introducing the new induction training for drivers.

Premium Motors has developed the new website to provide information about cars before making a booking. Janet is thinking of adding the option to book cars directly on the website.

Recommend whether Janet should use e-commerce to improve customer service at Premium Motors. Give reasons for your recommendation.

Item C: Fone ltd

Using Item C, explain one advantage to Fone ltd of being a private limited company when expanding the business.

The business has decided to expand by introducing car phone holders to its product range.

Using Item C, explain the opportunity cost of this decision.

There have been 500 applications received for the team leader’s job and the business now needs to shortlist only the most suitable applicants.

Using Item C, analyse one way the person specification can be used to decide which applicants to invite for an interview.

Item D: Fone ltd

Identify one reason for diseconomies of scale occurring.

Using the information in Table 2, calculate the average number of phone cases per month produced from April to June.

Demand for the new ultra-thin phone cases is increasing.

Analyse one advantage to Fone ltd of introducing its new flow production process.

Item E: Fone ltd

Introduce a new lean production technique

Each department can have a group of up to three employees making suggestions on how to improve the process to lead to higher productivity.

It will be optional to join these groups.

Groups can be set up immediately and will have responsibility for reviewing roles and tasks within the department and suggesting changes.

There will be a bonus of £5000 for each department (to be shared within the department) if they improve productivity in the next three months.

Change the organisational structure and recruit internally for new assistant managers within each department

Internal recruitment for assistant managers can be completed within a month.

This will result in a pay rise of £5000 for successful applicants.

Assistant managers will have the authority to make some decisions and will oversee training.

Figure 1 Current organisational structure of Fone ltd

Table 3 Information about employees’ productivity in each department at Fone ltd

Anita wants to increase the productivity of all employees quickly and plans to use two options to achieve this.

1. Introduce a new lean production technique to each department.

2. Change the organisational structure and recruit internally for new assistant managers within each department.

Analyse the effect of each of these two options on all employees at Fone ltd.

Recommend which option Fone ltd should introduce first to improve productivity of all its employees in the short term.

Which of the following characteristics of an entrepreneur is the ability to develop new ideas/products?

Which of the following describes the chain of command?

Which of the following is a definition of a part time contract of employment?

Which of the following is the formula for total costs?

Which of the following is the next stage in the selection process after the closing date for job applications?

Enterprise is one of the four factors of production. Which of the following is a definition of enterprise?

State two financial methods of motivation.

Explain one method a business may use to expand.

Explain one benefit of job production to a business.

Explain one benefit to shareholders of limited liability.

Identify two stages of the process of procurement.

State and explain two employment laws.

Item A: JAA Toys

Explain one reason why the objectives of a business may change over time.

Jameel expects to produce and sell 40 toys per month at a price of £30 each.

Each toy will cost £6.50 to make. Other business costs will be £80 per month.

Jameel plans to take some money from the business’ profits.

Calculate how much Jameel would take each month if he pays himself 80% of the profit.

Jameel would have three months to make the 100 toys for the local toy shop.

Recommend whether Jameel should create a business plan before making a decision about accepting the order. Give reasons for your recommendation.

Item B: JAA Toys

Explain one way in which health and safety law might decrease the profits of a business.

Jameel will manage all the employees himself.

Analyse one drawback of a flat organisational structure for JAA Toys.

It is difficult for Jameel to predict demand and there are times when he has few orders.

Recommend whether Jameel should use zero-hour contracts for the new employees. Give reasons for your recommendation.

Identify two stakeholders of a business.

Using Item A, explain one disadvantage to Ellie of using money borrowed from her parents to set up Swiftly Services.

Using Table 2, calculate the closing balance for May on the cash flow forecast.

State the formula for the closing balance and show your workings.

Ellie is considering offering gardening services in June, July and August.

Recommend whether offering gardening services will improve the long-term future cash flow at Swiftly Services. Give reasons for your recommendation.

Item B: Swiftly Services

Ellie estimates that her weekly revenue from the gardening services will be £1320. Cost of goods sold, eg plants, will be £528. Other expenses are £396.

Calculate the gross profit margin for the gardening services.

Ellie is planning to segment her market and focus on families with children.

Analyse one benefit for Swiftly Services of using segmentation in a competitive market.

Ellie is considering using professionally printed leaflets to promote the new gardening services. It will cost 15p to print a colour leaflet. The minimum order is 2000 leaflets.

Recommend whether Ellie should use leaflets to promote the new gardening services. Give reasons for your recommendation.

Item C: BEco Bottle

Explain one characteristic of the growth stage of the product life cycle.

Using Item C, explain one type of economy of scale that might benefit Jake’s

Jake used the Internet to collect secondary market research for his business plan.

Analyse one disadvantage of Jake using the information he gathered from his Internet

Item D: BEco Bottles

Jake is considering changing his pricing strategy from price skimming to competitive

Analyse one benefit for Jake’s business of using a competitive pricing strategy.

Figure 1 BEco Bottle break-even chart at current selling price

To remain competitive, Jake has reduced the price of the BEco Bottle. At this new price, the level of sales and his costs remain the same. If Jake sells 5000 bottles, total revenue falls from £90 000 to £75 000.

Using Figure 1, calculate the fall in profit as a percentage if Jake sells 5000 bottles at the new lower price.

State the formula for net profit and show your workings.

Item E: BEco Bottle

Jake wants to target a new BEco Bottle at sports people and needs to increase production. He is considering two options to achieve this:

• outsource production of the sports bottle to India

• use hire purchase to buy the new equipment to manufacture the sports bottle in his existing factory.

Analyse the effect of each of these two options for the business.

Evaluate which of these two options will have the bigger impact on the future success of the sports bottle.

Item A: TradeUp

Identify the business sector that provides services to customers.

Calculate the average number of TradeUp stores opened each year from 2017 to 2019.

Show all workings.

Analyse one benefit for TradeUp of expanding through franchising.

Amelia is considering using a focus group of six customers to gain feedback on her idea.

Advise Amelia whether it is a good idea to use a focus group for her research. Give reasons for your advice.

Item B: TradeUp

Table 1 Extract of Income Statement for year ending April 2020

Explain one factor that influences pricing decisions.

Amelia is aiming to reduce cost of sales in 2021 so she can improve her gross profit. She predicts her sales revenue will stay the same.

Calculate the difference in the gross profit margin between 2020 and 2021 if Amelia increases gross profit by 25%.

State the formula for gross profit margin and show your workings.

Recommend whether Amelia should relocate her TradeUp store from the town centre to the retail park.

Give reasons for your answer.

Item C: Devine Jewellery (DJ) plc

Explain one way that shareholders can have an impact on a business.

Using Item C, explain one way that Devine Jewellery is able to compete successfully internationally.

Use the information in Item C to calculate the percentage decrease in the selling price of a bracelet if it is made from silver instead of gold.

Show all workings.

Analyse one potential impact of the new jewellery collection on Devine Jewellery.

Item D: Devine Jewellery (DJ) plc

Explain one way a business can use digital technology to communicate with customers.

Explain one way that Devine Jewellery will be affected if the exchange rate of the pound falls against other currencies.

Analyse one benefit to Devine Jewellery of using sponsorship of the fashion show to promote its jewellery.

Item E: Devine Jewellery (DJ) plc

Dev wants to improve the financial performance of Devine Jewellery. Dev is considering two options to achieve this. Recommend whether Devine Jewellery should:

• use the hotel chain as a channel of distribution to sell its jewellery

• remove the current credit scheme so that customers can no longer pay for jewellery in monthly instalments.

Analyse the effect of each of these two options on Devine Jewellery.

Evaluate which of these two options will have the biggest impact on the future success of Devine Jewellery.