FORMULAE FOR INTERNATIONAL GCSE BUSINESS, Gross profit margin: Gross profit = revenue ~ cost of sales Gross profit margin = 9f055 Profit 100 Fevenue Operating profit margin: Operating profit = gross profit— other ‘operating expenses Operating profit margin = 2Perating profit 1 revenue baa Markup: Markup = Profitperitem | 1 cost per item Return on capital employed (ROCE): operating profit ROCE = —POEUNO Prof capital employed * (00 Current ratio: current assets Current ratio= ——— "S58 _ current liabilities Acid test ratio: a current assets ~ inventory ‘Acid test ratio = SEES = ventory current liabilities‘Answer ALL questions. Write your answers in the spaces provided. Some questions must be answered with a cross in a box Bf you change your mind about an answer, puta line through the box 8 and then mark your new answer with a cross 5. 1. Nantgwynfaen Organic Farm (NOF) is a farm growing a range of fruit and vegetables. It has a farm shop and offers accommodation with breakfast. It was set up by Amanda and Ken Edwards in West Wales, UK. NOF supports farmers by sling cara pode ints fam shop. The produce from the farm shop is served to the visitors staying overnight at the farm. NOF is committed tobeing envronmentalyfiendly by recycling, avoiding the use of packaging and edicng the use ofelecticy. Va olan. jysinssh ROR (2) (i) Which one of the following is an external source of finance? ci Select one answer, A Personal savings OB Retained prof BK ¢ Bankloan OD Selling assets (i) Which one of the following is the name of a pricing strategy where a business sets a high price for a new product in the market? «) Select one answer, @ A Penetration OB Skimming DC Competition DD Promotional (iil) Which one of the following types of discrimination is protected by legislation? a) Select one answer. GA Age OB Ability GB ¢ Social &) D Ethical(iv) Which one of the following is a document employers would send to potential employees? A Select one answer, OA Curriculum vitae SX B Letter of application © Newspaper advertisement 1D Person specification NOF imports dried fruit from France. A kilogram (kg) costs €12.84, ‘The exchange rate is £1 (Pound sterling) = €1.16 (Euro). (¥) Which one of the following would NOF pay for 1kg of dried fruit in pounds sterling? a) Select one answer. Boa £116 B e107 Dc £1284 DD £1400 NOF buys honey from a local farm for £1.60 a jar and sells it to customers for £3.60. (vi) What is the markup on a jar of honey? a) Select one answer DA 16% BH Bm BC 125% OD 250% (b) Define the term profit. 1)() Define the term non-current liabilities. __Don=.Curcent.... abilidies.....owre,..debe. Moa Gi Beno (@ State one reason why NOF segments its target market by income. i} _Toenture.... wh prada Paals...aind..vegetables cure... wn liffecdbole fle BML le Sen Figure 1 is an extract from NOFS statement of comprehensive Income. £000s Revenue 160 Cost of sales 70 Gross profit 90 Other operating expenses 10 Figure 1 (€) Calculate the operating profit margin. You are advised to show your working, (2)ees er es ee | (f) Explain one strategy a small business might use to extend the product life cycle of one of its products, eh Inorder...toevtend the Produc lfe cycle _bussnass Con eck. Pr. WAYS of Pramatt enrol... cotta lustamors... Ft example. Bucnass tun use. BOAQE 06. ~Afiting, discounts off. the... Product. his.Coun. a | Custemens.andl.... CNCowage .and...lacrcase...Sales | Product. Mere... populeur,.ond..relevan. —ie A { (g) Analyse the importance of marketing to NOF. Mar kefing, lg really (mpactant. foro. business Sinke...k...heles.... business. Adenhfg Customer's. Needs. and lomand...uk_ alo. pales business_.with. (denfus GastamerS..... Opialoas..... towards... NOF...Thes gjves-- OF a. Chance to_lenany hid. feaple. think oftheir. peoduchs... fram... diflereed. Prespective...Tt. it. also. lmpartant becanse. busuness. Cann, adapt Changes. in Gahmerts. behaviaur quickly. ond..Can fens ther. Weak... Paunts...S0. thaf they Can. tor, on_.th., [mproiing.Hneu.. Produch, and. Series» Improving Prodwcts.....WiM \ncreace... betsr. Cas SatishachenandtmP Increase Sales and Revenue eventuall mngroving. Quallitey. and... Lmage.. af baebitrtS. he (6) (Total for Question 1 = 20 marks)The demand for NOF products can be affected by external factors, 2 (a) State one external factor that could cause a change in demand for NOF Products, a) Competes. offering ~Metler..uality...0c.. atten .Pricas (b) State one reason NOF might use other retailers to sell its products, (1) To teat a usdor Range..go..cntlomers...lacactoat (©) Explain one benefit to @ business of using secondary market research, (3) s Seconclavy ~tovkek: _tegeatcch....are.. Cheap. Yet “ub ~SHU eles. you 1dentify. mace —nesearein Customer ~demand 50, You‘ be_able_'o. Adentify howd Jo. Increase. Cutlass. SahshchonDo NoTWAITEINTHIS AREA®, ‘DO NOT WRITE IN THIS AREA DO NOT WRITEINTHIS AREA \ (@) Explain one limitation of a cash flow forecast when making business decisions. 7 8) Soratkines...48More...focecaste.. documents Chr Samakmas be.-Maccurate... Thig leads Bugnoss... ontner te. Poales ake. Wrong. decisions based on Winaccuurede PRS ALtS Fathe. thas a od to...butne ss. Level dropping. Dacisions talon _bated..on Cath fat. peccett. te are nb lenced. ty. Revenue... orf Prefs bil Car bea. bad. fear fo Ub Influence... decision... (@) Explain one benefit to a business of using crowafunding as a source of finance. 7 —Corousdltinadeng. _Oan._be....0... rem... Sores... france Siace Mendy wilh...ob..'de Fayed bake and_. ‘No_lnterest.. rotes..wsiM..1oe...Rayed eiMaoe...tmaatiing. entenetese business... Inde. cwir...unta dbs oy olives Hol. peed t0...Ire. fuged. Betis — €or - = _Owoer 0M also. hare limbed _folowky Joi business. last guna. not leore Anis, e2¢_.LAN Di fo shennaneS Itintends to turn the corn into popcorn NOFhas recently harvested its com crop, called 'NOF pop'to sell nd through local retailers. NOFis considering two options to Introduce the product into the, market Option 1: offering a low introductory price for three months Pace SdH Option 2: selling at the same price as competitors. (f) Justify which one of these two options NOF should choose. 9) \_recommond offering a. Loe..tidbrgduchc fn Pri Cte fo—2 monthe Since. jiue...Can_-help.attract...Gastentr— to. Ary new_.Rroduct.. This... Can -teteease Becks Later. Anorease......swles..ond. poole Manton... Gushamer. yay and Sahsachon....ceag— 8 Perce When Selling throug. pelos thang. ejb be Selling, GtoerReP Corn brands .as.toedl.S0. halt Custemess...abe. a. a_betailer. thep...thig lait beable 11 Compats.... Prices. and... Chasse. .the... Cheapec.0ne..i. Prucluct.Sabiched Customers Aon .they...silrepest. Qurchase Since e. the. Poe.corn...is....Cneae...anch...Salishins..\han.this...lacceages Salus _.ourhme and..$0. lnowases...PePulontty 4- Product. es deg lows. puces..an__\adicate. the. lmpressian....be cs Mook NOE pops alow ‘ ; Overall 4 NCE Snodd gp coro. Love ma 5 2a fee menths...10...obthace as homess And — da. ee aes tron aR to_ tty of _ee.Siace US Crear. Hamers WiU__\ess eke... i ca$_.om... qual ; Ye Ves Nhe by Ue oo . NOE oa YAUY SIHLNI LIU ton on Chance 42__prove. eae aquslity. gh -NOE pep Wi. :snakang,..Castemas Move Parohace....and. Wireage..Praduck. Popa. e a . 2 eel ——— _ a (Total for Question 2=20 marks)3 (@) Define the term remuneration. - (b) Outline one reason why NOF would choose to use seasonal staff when harvesting its products. (2) To._checrease..Gasts.....dince. Seasons) srw are. temporary. Stef and_ yin he paul _fived—saleries NOF is looking to expand its product range by making and selling tubs of ice cream. Atub of ice cream will sell for £2.50. Variable costs will be £1.10 per tub of ice cream with fixed costs of £77 per day, (©) Calculate the number of tubs of ice cream NOF will have to sell each day to break-even. You are advised to show your working, (2) Fut ed cost 47 Gonbibulie~ oe 9.5¢=).10 = 55 DB nn Tubs of ce cream\ } 3 3 DO NOT WRITE INTHIS AREA. [He _cusestivas...k...canalso_hale.lousiness.ee— DONOTWRITEIN THIS AKEA (@) Analyse how useful break-even calculations can be for NOF when deciding whether to include ice cream in its product range. (6) Break = even... analysis..Con._halp. busingsses... a sisar Sanat «fleck: tei as the Pee product ca Phas holes. 1 dency Wether bain, Ice... Cream... in Oe Pe eae Wath itor potthas...o0vid... bturacs—. taking the risk, losing ..tinese—taatig-- and wach np husieass...hime find... nekeeses... So. Hass Ices ses fo uSi et 8S a A ennut NOF is looking to increase the number of visitors to the farm. it will need to carry O some research as to what potential visitors will want. To do this NOF is considering two options: Option 1: handing out questionnaires at local retallers Option 2: using the internet to research other farms. {€) Justify which one of these two options NOF should choose. ei \__recommencl, handing owk..queshinnanres....Ab. \ocal yetoulers.... Since... thie Increases... fice, ta fee Commanicaben ihich....Caes_mprave.Public.. pelafian.s tals... Castertars. Hag ba__turn.Can_(nirease Iecogpiticn...fronCostlone cs... ky JOE Wher... PAC. relabiins merase. Castine... Sabisfaction lta. \ncreases. Honcliog, cut. quettionaurce ab. lacal retaileer Se od method. because ik also @ gives a Chance Yo fusinas. to _ceach wider .audkence...,itce many. CattenosS.VSIK local _relnilecs..tobyy dante =dog (Hens So dusiness..\ail_ reach Many Cuttemers and. ctl get mony | ouncuoes ick. However. Sand _cuskmecs...snighk.gek (doreyed?akich ...Caused_..dentisfiction. end in burn. raight... decreases. amaane. of People. answering Guestionalmes ovecall NF srould hand. .cuk. queshomaires...at local etuslers.._Suace inc as voce will be. ale._be Clear and. diceck.antwecs fran .Custemor ancl Wi. encute. thet Custemers..nove. answered. gquellicnnaix€ So Can keep track 4. oaswiecs +8. it MIU be. expensive. Vawever. the. answect and ths. fedoack fein Cuslimec WU be uc tho Pay inant... So. Haak Guckomess ane VaUV SIMI NI ALIN Low an VAUV SILI LUM LON OG 000 oa4 attradred and ine Mee. busiaass Bo. Shed coucntvally iste Me Pee : ba a (Total for Question 3 = 20 marks) _> 4 Figure 2 is an extract from NOFS financial information for 2020. £ Current assets 300 000 Stock 50.000 Current liabilities 220.000 Figure 2 (@) Calculate, to 2 decimal places, the current ratio for 2020. You are advised to show your working. a (2) 3a_coe kao aol \. 36(b) Analyse the benefits to NOF of using personal savings to expand its product range. 5 (6) : ws RES Business Wien? Personal... Sariags....bo..eePand US__Mreduck.. Tange 19... Great ee - al A Sea fs - Xpanding.__Produtd._ range Pe “Untresek. ty... deel. be... do Shan ee A a NOE 5.009. tnoney. = And if. NOF. Successhuly. expanded its ..Peedud. range... cthen__they Yall notre fo... Saas. profits a bart anyone... SiN¢e..._.Ino...LMWVestements Nave... heed. Made dnd Seno __-slephrimctineoliviclen dso. be dishibubed... this Increases... Poof mado by business and. Profi 8. ule b.. foc.enawidcs. ndyf Ider when measuring the success © ided as well as your own knowledge of business. (12) (©) Evaluate the factors that NOF might consi its farm shop. You should use the information provi yu ——Can—uSe—the —franciol—shabencent-to recom 2 using. financied.... Siefeme nts... meas4ring..CsberOr SabiSaotion ard. Measuring madlk Ghauc..\@.USung piown-cial.odeenear..... allouss ye fo Cowapare..fhs...Prefit... Yourke NOE. as made...uiibln..peemiaus....neathys or. [jor TE Pot a rocrensing, then toysinassis.loang. Successful —¥fp..NOE can also...compout..fatancia) _Shatemeds: With _vived_ 4) Compare .prafi..and succectHialever. SUCCES lst __only..measured.... by... Howd..ruch -Pratth...leusivess U_malingye (business. Can aksa mate Aces. ..y. mesduriag Csttomer Ghfaclion » this..Can..beChitied._cuts oy. Moulat_peseatcch to...nadp_bourwaoe _9ek\oSecenation and. feedback m....hwi.mmach...Cutlonore..dre...babiSfied witha. butiosss!_.Pedftrmance.... Business....Can..also_.use Sis. Mi ate 4 gnalyse _dacue stakes. _omd._wscel.rm..fhem. £6. Hoa toy Coun. beep Lp reve nine Perbeeinon ce ..ond teres lowsingss.. Success» Fnolly...busines. (an, check Norker Share Comipaued...'o..._rivils. nd,“ peonieng... Yeas... Chace. + NOES _.market Shoe Gpowiing, overal.NOE_ shauld, Froncied_Stuterdents., measure... attomor_.Sabisfack = gon Ingndwre...uuckel... Cha... e {N00 00 0 VAUV SIMLNI TIAN inten \VAUV SIHLNIALIUM LON OG