edexcel gcse business - presdales school · 2020. 11. 17. · instructions. • use blackink or...

Edexcel GCSEBusiness

Question PaperPaper 1b

Investigating small business

PRACTICE EXAM PAPER

Edexcel GCSE Business Practice Exam Paper 1b

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Write your name here

Centre Number Candidate Number

Surname

Practice paperTime: 1 hour 30 Minutes

You do not need any other materials Total

Paper reference

Paper 1b

Other names

Edexcel GCSE BusinessPaper 1b: Investigating small business

Instructions • Use black ink or black ball-point pen • Fill in the boxes at the top of this page with your name, centre number and candidate number • There are three sections in this paper • Answer all questions in each section • Answer the questions in the spaces provided – there may be more space than you need • Calculators may be used • You are advised to show all your working out with your answer clearly identified at the end of your solution

Information • The total mark for this paper is 90 • The marks for each question are shown in brackets – use this as a guide as to how much time to spend on each question

Advice • Read each question carefully before you start to answer it • Try to answer every question • Check your answers if you have time at the end

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ANSWER ALL QUESTIONS. WRITE YOUR ANSWERS IN THE SPACES PROVIDED

Edexcel GCSE Business Paper 1bSection A

1 (a) Which one of the following is not a principle of employment law?

Select one answer:

A Recruitment B Consumer rights C Discrimination D Health and safety

(1)

(b) Which one of the following is a benefit of preparing a business plan?

Select one answer:

A It helps the business to obtain finance B It takes time to write C It has to be reviewed regularly D It costs money to prepare

(1)

Some questions must be answered with a cross in a box . If you change your mind about an answer, put

a line through the box and then mark your new answer with a cross .7

7

(c) Explain one reason why a business would undertake market research.

(3)

7


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(d) Explain one disadvantage to a business of using an overdraft as a source of finance.

(3)

(Total for Question 1 = 8 marks)

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2 (a) Which two of the following are benefits of using a market map?

Select two answers:

A Proves demand exists for a product or service B Guarantees business success C Identifies a gap in the market D The map is based on market research E Shows features of competitors

(2)

(b) Which two of the following are not stakeholders of a partnership?

Select two answers:

A Board of directors B Customers C Employees D Shareholders E Suppliers

(2)

(c) Using the information below calculate the total profit for the business. You are advised to show your workings.

Number of units sold: 20,000

Selling price per unit: £5.00

Fixed costs: £25,000

Variable costs per unit: £3.00

(2)

£


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(d) Explain one reason why a falling exchange rate might be good for a UK export business.

(3)

(e) Explain one reason why new business ideas come about.

(3)


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3 (a) Which one of the following could cause a decrease in the break even level of output?

Select one answer:

A A decrease in fixed costs B A decrease in revenue C An increase in total costs D An increase in variable costs

(1)

(b) Using the information below, calculate the closing balance for the business. You are advised to show your workings.

Opening balance: £38,560

Cash inflows: £119,430

Cash outflows: £98,120

(2)

£

(c) Explain one benefit to a business of using e-commerce.

(3)


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(d) Explain one reward of an entrepreneur opening a new business.

(3)

(e) Discuss the likely impact of changing customer needs on the marketing mix of a business.

(6)


TOTAL FOR SECTION A = 35 marks

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MAKING MONEY FROM RARE BOOKS – A BEGINNERS GUIDE (Extract)

ANSWER ALL QUESTIONS IN THE SPACES PROVIDED

Section B

Look at Figures 1 and 2, read the following extract carefully, then answer Questions 4, 5 and 6.

Dhana Reed set up Online Book Selling 5 years ago, visiting local charity shops and car boot sales buying boxes of inexpensive, second hand books. These were promoted online, sold and posted to UK customers. Although demand was high, selling prices were often low. Disappointingly, some books had to be sold for as little as 50 pence plus postage.

To increase sales and ensure she has a positive cash-flow, Dhana is wondering whether she should reduce her prices, due to the market being so competitive. Alternatively, she is considering specialising in sports books, especially those featuring or written by famous sports people (Figure 1), as she believes a gap in the market exists in this particular area. If she did specialise however, she would need to dispose of some of her existing stock and build up new stocks of sports books. She predicts she would have to pay higher prices for interesting or old sports books and as a result, would therefore need to increase her selling prices. Although Dhana wants to make a profit, Dhana is passionate about reading and donates £25 per month to a local book charity, in line with the Online Book Selling’s social objective.

Over the years, Dhana has developed an excellent website and now intends to set up a Facebook page and Twitter feed to share interesting information about her books. Having her business located at home has meant that storage space for her books is tight, despite donating some unsold stock to local charity shops. As a result, she is now considering buying or renting a local warehouse.

In the absence of finding a rare and valuable book (Figure 2), Dhana needs to make a decision!

Figure 1

Figure 2

Selling books on line is a chance to make a lot of money. When you find a rare book it can sell, in some cases, for thousands of pounds. Many people first find rare books by chance, a dusty box in the corner of the attic or an interesting book at a car boot sale. Although there are a small number of books which can sell for hundreds of thousands of pounds, you will need to do some research to see if it is worth anything at all.

There are many ways to check the value of interesting looking books. Book dealers’ websites and auction sites, such as eBay and Amazon, provide a good guide. More recent books will have a bar code (ISBN) which provides a unique computer reference number. The book itself will often provide date of publication and information as to whether it is a more valuable first edition.


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4 (a) Outline one benefit to Online Book Selling of having a social objective.

(2)

(b) Analyse one benefit to Online Book Selling of having a positive cash-flow.

(6)


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5 As a result of a shortage of storage space, Dhana is considering renting a local warehouse from which to operate Online Book Selling.

(a) Outline one factor that Dhana should consider when deciding upon the location of the warehouse.

(2)

Dhana has calculated that in order to break even she needs to sell 6 books a day, 7 days a week. Last week she sold 60 books.

(b) Calculate Dhana’s margin of safety for last week. You are advised to show your workings.

(2)

books


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(c) Analyse the impact developments in technology might have on Online Book Selling.

(6)


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This year Last year

£s £s

Sales revenue £45,698 (ii)

Variable costs £23,500 £13,560

Fixed costs £12,700 £12,200

Profit (i) £12,690

6 Dhana is concerned about her recent profit levels and has produced a table to compare these over the last two years (Figure 3).

Figure 3

(a) Calculate the two missing figures shown in the table.

(2)

(b) State one reason why Online Book Selling’s profit might have reduced.

(1)


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Dhana is considering two options to increase Online Book Selling’s sales:

Option 1: Reducing average prices by 10%

Option 2: Specialising in sports books

(c) Justify which one of these two options Dhana should choose.

(9)


TOTAL FOR SECTION B = 30 marks

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ANSWER ALL QUESTIONS IN THIS SECTION

Section C

Seatown is a picturesque seaside resort that boasts award-winning beaches and sea front cafes. Water sports have always been a popular pastime for its thousands of summer visitors, with many businesses offering tuition and equipment rental.

Jim and Susan have been visiting Seatown (Figure 4) since they were children and met and became great friends whilst camping with their families. Both water sports lovers and qualified instructors, they feel that the time is now right to set up their own business in the town. They want equal ownership and a legal structure that is simple to set up and, given the aggressive nature of their rivals, are keen to keep their business information private. Jim and Susan are unsure as to whether they should set up as a partnership or a private limited company.

Jim and Susan’s business idea is to rent out surf boards, paddle boards (Figure 5), and sea canoes and offer tuition (Figure 6) to locals, but mainly tourists who visit the area. However, given the high level of competition, they want to make their water sports business stand out from the crowd. In order to do this, they intend to recruit fully qualified professionals, who will consistently operate at the highest standards, and use top of the range equipment. In addition, they plan to offer “lunch on the beach” deals and a pickup and drop off service from local hotels. As a result, Jim and Susan feel they will be able to charge higher prices due to the quality of their service. They intend to make use of social media and online promotion to attract a younger market segment.

Eager to avoid debt, Jim intends to invest half of an inheritance he is due to receive in the next 6 months into the business and Susan will invest half of her personal savings. They are both keen to keep some money in their personal bank accounts, avoid any unnecessary financial risk and make a healthy profit. Their family and friends have also expressed an interest in supporting the business financially. They are aware that set up costs may be high and are concerned that they will not be able to pay suppliers in full until Jim receives his inheritance. Also, as owners, Jim and Susan are prepared to work for a lower amount than the professional instructors who are asking for much higher rates of pay.

Look at Figures 4, 5 and 6, read the following extract carefully, then answer Question 7.

Figure 6

Type of Course Cost

Introduction to paddle boarding Per half day, including tuition £60 Per day, including tuition £80Equipment only, £25 per hour

Introduction to canoeing/surfing Per half day, including tuition £70 Per day, including tuition £85Equipment only, £30 per hour

10% discount for bookings made online and paid for in advance Free hotel pick up and drop off

Optional “lunch on the beach” deals All “equipment only” bookings require a £200 deposit

Figure 4

Figure 5


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7 (a) State one source of finance that Jim and Susan could use to start up their business.

(1)

(b) Identify one way in which Jim and Susan could add value to their business.

(1)

(c) Outline one possible conflict that could exist between stakeholders of Jim and Susan’s business.

(2)

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Jim and Susan are considering two options in their choice of ownership for their business start-up.

Option 1: Partnership

Option 2: Private limited company

(d) Justify which one of these two options Jim and Susan should choose.

(9)


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(e) Evaluate whether Jim and Susan’s marketing mix is likely to be a success. You should use the information provided as well as your knowledge of business.

(12)

edexcel gcse business - presdales school · 2020. 11. 17. · instructions. • use blackink or...

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