2016 PRELIMINARY EXAM

Business Studies
Total marks – 70

Sectio n I Pages 2–7

20 marks
• Attempt Questions 1–20
• Allow about 35 minutes for this section
General Instructions
Section II Pages 8–13
• Reading time – 5 minutes
• Working time – 2 hours 30 marks
• Write using black pen • Attempt Questions 21–23
• Boardapproved calculators may • Allow about 50 minutes for this section
be used
Section III Page 14
20 marks
• Attempt Question 24
• Allow about 35 minutes for this section
Section I

20 marks
Attempt Questions 1–20
Allow about 35 minutes for this section

Use the multiplechoice answer sheet for Questions 1–20.

1 A mobile company has designed a logo to market its mobile phones.

Which marketing strategy is being used by the company?

(A) Product
(B) Place
(C) Promotion
(D) Price

2 The Australian Bureau of Statistics classifies the size of a business according to the
number of employees.

Small businesses under this classification have employees between:

(A) 0 and 20
(B) 0 and 5
(C) 5 and 20
(D) 20 and 200

3 Which business function transforms raw materials into finished products?

(A) Human resources

(B) Finance
(C) Operations
(D) Marketing

4 Which of the following activities is part of the acquisition phase of the human resource
cycle?

(A) Improving employees’ skills

(B) Increasing employees’ pay
(C) Recruiting new employees
(D) Motivating employees
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5 Shane operates a tutoring service from home.

To which industry sector does Shane’s business belong?

(A) Primary
(B) Secondary
(C) Quaternary
(D) Quinary

6 Which level of government is responsible for zoning?

(A) Local
(B) State
(C) Federal
(D) National

7 ‘Gorgeous Flowers’ relies on passing customers and impulse buyers for much of their
sales. Despite the high lease expenses, the owners believe that their location in a
shopping mall is vital to their success.

What is the key consideration in their choice of location?

(A) Cost
(B) Proximity to suppliers
(C) Visibility
(D) Acquisition

8 Peters Real Estate have revised their 2016 business plan to focus on increasing market
share.

How can this goal be best classified?

(A) Financial
(B) Personal
(C) Cost minimisation
(D) Social

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9 Which of the following are reasons an entrepreneur might start a business?

(A) Economic, financial, geographic

(B) Employment, quality of life, profit
(C) Establishment, growth, maturity
(D) Location, resources, business culture

10 Why might a business owner choose to incorporate a business?

(A) To gain limited liability

(B) To liquidate assets
(C) To reduce accounting and compliance costs
(D) To gain unlimited liability

11 Which of the following are key factors to be considered in choosing the legal structure of
a business?

(A) Planning, organising and leading

(B) Size, ownership and finance
(C) Financial, social and personal
(D) Sole trader, partnership and private company

12 Employees in an industry have sought an 18% wage increase over the next three years.

Which stakeholder would likely represent the employees in this process?

(A) Employer Association

(B) Shareholder Association
(C) Management
(D) Trade Union

13 Collecting and summarizing information about potential customers is characteristic of

which of the following?

(A) Monitoring
(B) Outsourcing
(C) Customer choice
(D) Market research

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14 Luke purchases shares in a public company listed on the Australian Stock Exchange.

What is the name given to the income that Luke will receive from this public company?

(A) Dividends
(B) Gross Profits
(C) Rent
(D) Wages

15 A business is reviewing its forecast financial budget with actual results.

Which part of the business planning process is this?

(A) Forecasting
(B) Organising
(C) Leading
(D) Monitoring

16 Which of the following are examples of employee on-costs?

(A) Long service leave, annual leave loading, weekly pay

(B) Worker’s compensation insurance, annual leave loading, long service leave
(C) Annual leave loading, salary, long service leave
(D) Fortnightly pay, worker’s compensation, superannuation

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17 Use the following information to answer Question 17.

Balance sheet of Smiths Pies

as at 30/06/2016

Cash at bank 30,000

Mortgage 390,000
Inventory 70,000
Building 600,000
Accounts payable 80,000
Accounts receivable 40,000

Which of the following is the owner’s equity for Smiths Pies?

(A) $ 370,000
(B) $ 510,000
(C) $ 310,000
(D) $ 270,000

18 A burger takeaway business has $400,000 in annual fixed costs. It costs $2.80 to make a
burger, which is sold for $6.00.

How many burgers need to be sold per year to break even?

(A) 200,000
(B) 66,667
(C) 400,000
(D) 125,000

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19 Use the following information to answer Question 19

Revenue statement of Fresh Fruits

year ended 30 June 2016
Sales 400,000
Opening stock 200,000
Purchases 130,000
Closing stock 100,000
Cost of goods sold 230,000

Gross profit XXXXX

Expenses
Advertising 15,000
Rent 5,500
Wages 24,000
Delivery 10,000
Electricity 5,000
Telephone 1,000
60,500
Net profit XXXXX

What was the net profit for 2016?

(A) $109,500
(B) $170,000
(C) $60,500
(D) $400,000

20 Which of the following forms of business finance is likely to attract the highest cost?

(A) Mortgage
(B) Car loan
(C) Factoring
(D) Term loan

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2 0 1 6 P R E L I M I N A R Y E X A M I N AT I O N

Business Studies
Section II

30 marks
Attempt Questions 21–23
Allow about 50 minutes for this section

Answer the questions in the spaces provided. These spaces provide guidance for the
expected length of response.

Extra writing space is provided on page 13. If you use this space, clearly indicate which
question you are answering.

Please turn over

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Question 21 (8 marks)

Hairstylz4U has been operating successfully in Sydney for 12 years. They are now
facing extensive competition which is saturating the market. Management has had a
meeting to plan how to remain successful in the future and avoid cessation.

(a) Identify TWO challenges that Hairstylz4U is likely to encounter in the maturity 2
stage of its life cycle.

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(b) Distinguish between voluntary and involuntary cessation. 2

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(c) Explain, with examples, renewal strategies that could be used by Hairstylz4U. 4

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Question 22 (10 marks)

(a) Identify TWO personal qualities of successful entrepreneurs. 2

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(b) Outline ONE advantage and ONE disadvantage of establishing a new business. 4
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(c) Analyse the effect of competition on the establishment of a business. 4

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Question 23 (12 marks)

A call centre has 40 staff who report to 12 floor supervisors. These supervisors then
report to a management team of 4. Management recently noticed that some staff
members are regularly late to work on Friday mornings. As a result, management
instructed the supervisors to introduce financial penalties for lateness and hold
employees back late each Wednesday for a staff meeting. Employee morale is low.

(a) Identify the leadership style demonstrated by management. 1

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(b) Outline how better interpersonal skills could have helped management deal with 2
this problem more effectively.

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(c) Explain TWO advantages to the business from flattening its organisational 4
structure.

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(d) Assess how the contingency approach could be used in this business. 5
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Section II Extra writing space

If you use this space, clearly indicate which question you are answering.

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2 0 1 6 P R E L I M I N A R Y E X A M I N AT I O N

Business Studies
Section III

20 marks
Attempt Question 24
Allow about 35 minutes for this section

Answer the question in the Section III Writing Booklet. Extra writing booklets are available.

Your answer will be assessed on how well you:

■ demonstrate knowledge and understanding relevant to the question
■ apply the hypothetical business situation
■ communicate using relevant business terminology and concepts
■ present a sustained, logical and cohesive response in the form of a business report

Question 24 (20 marks)

John and Jodi have been running their ‘Pizza and Pasta’ restaurant in suburban
Sydney for 10 years with six fulltime employees. In recent years, their business has
declined in sales and profitability. John and Jodi are struggling to keep it operating
and are considering downsizing.

You have been hired to write a business report for John and Jodi.

In your report, you should:

 outline TWO external influences that may have impacted on the business
 explain, with the use of examples, how a situation analysis could be used to improve
the business
 suggest TWO strategies that could help change be managed effectively.

End of paper

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