Mock Exam 1

Faculty : Fyruz Khan

Subject : Business Studies

Curriculum : Cambridge IGCSE
Level : O Level
Code : 0450
Paper : 2
Marks : 80
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Celebration Biscuits (CB)

Chris is qualified as a chef and baker. He was made redundant from a restaurant after it closed. The
Government provides advice to unemployed people to help them start their own business. Chris
has had an idea for a business known as Celebration Biscuits (CB). He wants the business to be a
partnership and thinks this will be better than a sole trader or a private limited company.

His idea is to make and sell large biscuits with messages on them such as ‘Happy Birthday’ or
‘Congratulations’ with the name of the person on them.

Chris has many things to do before he can start trading. He needs to find suppliers of the ingredients
and test his recipes. He intends to start by using his own kitchen and oven to bake the biscuits. Chris
will have to ensure that each biscuit is always of the highest quality and any broken biscuits will have to
be thrown away. Chris could buy a new larger oven for his kitchen and then he would need an employee
to help him produce more biscuits.

Marketing will be very important to CB and Chris will need to decide on a marketing mix for his biscuits
to improve the chance of the business being successful. His target market is mainly parents giving a
celebration biscuit to their children on their birthday.

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Appendix 1

Forecast financial information on two options for CB

The figures are all weekly and in $

Option A Option B

Use new oven to bake 500 Use his existing oven to bake
biscuits a week 250 biscuits a week
Revenue (sales) 4500 2500
Cost of sales
2800 1500
(cost of goods sold)
Fixed costs 1000 500

Appendix 2

Proposed newspaper advert for CB

Celebrate a birthday or
other happy event by
giving a biscuit with a
personal message on it.
This gift will be unique to
the person. Buy them for
birthdays, graduation,
weddings or any other
event you want to
celebrate.

Appendix 3

City News May 2015

The Government is introducing more laws to protect consumers and employees. This is in addition to
the minimum wage law which already exists.

We already have laws to protect the environment and influence business location. The Government
thinks it is time to introduce more protection for employees. These laws may not be welcomed by
all businesses. However, small business owners will be pleased with the Government’s offer of more
financial help.

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1 (a) Chris wants to start up a new business. Identify and explain two ways Governments can
support new business start-ups.

Way 1: .......................................................................................................................................

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Explanation: ..............................................................................................................................

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Way 2: .......................................................................................................................................

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Explanation: ..............................................................................................................................

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(b) Chris will need to communicate with his suppliers when ordering ingredients. Consider the
advantages and disadvantages of three methods he could use to communicate with his
suppliers. Recommend the best method for him to choose if the order is urgent. Justify your
answer.

Method 1: ..................................................................................................................................

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Method 2: ..................................................................................................................................

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Method 3: ..................................................................................................................................

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Recommend the best method to use when the order is urgent: ...............................................

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2 (a) Identify and explain two reasons why marketing is important to CB when Chris starts his new
business.

Reason 1: .................................................................................................................................

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Explanation: ..............................................................................................................................

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Reason 2: .................................................................................................................................

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Explanation: ..............................................................................................................................

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(b) Chris has to decide on the ‘place’ part of his marketing mix. Consider the advantages and
disadvantages of the three following methods of distributing his biscuits to the target market.
Recommend which will be the best one to use. Justify your choice.

Selling through his own stalls in shopping malls:.......................................................................

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Selling through a website:..........................................................................................................

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Selling to large supermarkets: ...................................................................................................

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Recommendation:......................................................................................................................

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3 (a) Chris knows quality will be very important when producing his products. Identify and explain
two ways Chris could achieve quality production.

Way 1: .......................................................................................................................................

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Explanation: ..............................................................................................................................

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Way 2: .......................................................................................................................................

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Explanation: ..............................................................................................................................

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(b) Chris has two options to start up his business. Consider Option A and Option B. Recommend
which option he should choose. Justify your answer by calculating the profitability of each of
the two options.

Option A: ...................................................................................................................................

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Option B: ...................................................................................................................................

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Recommendation: .....................................................................................................................

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4 (a) Governments pass laws which affect businesses such as minimum wage laws. Identify and
explain two legal controls (other than minimum wage laws) which could affect Chris’s new
business.

Legal control 1: .........................................................................................................................

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Explanation: ..............................................................................................................................

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Legal control 2: .........................................................................................................................

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Explanation: ..............................................................................................................................

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(b) Chris is thinking of starting his business as a partnership rather than as a sole trader or a
private limited company. Explain why the following three factors are important to Chris when
deciding on the type of business organisation to choose. Do you think Chris’s decision to start
his business as a partnership is the right one? Justify your answer.

Liability: .....................................................................................................................................

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Finance: ....................................................................................................................................

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Owner’s experience in managing a business: ...........................................................................

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Conclusion: ...............................................................................................................................

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