Edexcel IGCSEBusiness StudiesGeneral Applications12 Marks

Read Figure 1 and Figure 2.

(a)Calculate the gross profit for 'Super Sweets' for the last financial year.[2]
(b)Calculate the current ratio for 'Super Sweets' for the last financial year.[2]
(c)Explain one benefit to 'Super Sweets' of expanding production.[2]
(d)Evaluate whether Sarah should purchase new machinery to automate some parts of the production process.[6]

This question uses a diagram from the original paper, which isn't shown here. Open the full paper from the past papers archive to see it.

Mark scheme

Marking points from the official mark scheme. The mark or mark type is shown in brackets.

**Question 19(a):**
Award 1 mark for correct formula or correct substitution. (C1)
Award 1 mark for correct answer. (A1)
Calculation: Gross Profit = Revenue – Cost of Sales = $150,000 – $60,000 = $90,000
Correct answer with no working receives full marks.
**Question 19(b):**
Award 1 mark for correct formula or correct substitution. (C1)
Award 1 mark for correct answer (1.67 or 1.666...). (A1)
Calculation: Current Ratio = Current Assets / Current Liabilities = $25,000 / $15,000 = 1.67:1 (or just 1.67)
Correct answer with no working receives full marks.
**Question 19(c):**
Award 1 mark for identification of a benefit (e.g. meet higher demand, increase sales/revenue, potential for economies of scale, increase market share). (B1)
Award 1 mark for linked explanation of the benefit, contextualised to Super Sweets. (B1)
e.g. Expanding production will allow 'Super Sweets' to meet the growing demand from online retailers (B1) which will mean they can increase sales and revenue, improving their financial performance (B1).
**Question 19(d):**
• Knowledge 2, Application 2, Analysis 2, Evaluation 2
• Award up to 2 marks for knowledge of automation/machinery (e.g. defines automation, identifies costs/benefits of machinery). (K)
• Award up to 2 marks for application to 'Super Sweets' (e.g. relates to specific problems like meeting demand, labour-intensive production, dependence on skilled staff, capital investment, handmade nature). (App)
• Award up to 2 marks for analysis of the impact of purchasing machinery (e.g. increased output, reduced unit costs, consistent quality, reduced reliance on skilled labour, high initial cost, potential resistance from employees, loss of 'handmade' USP). (An)
• Award up to 2 marks for evaluation of whether Sarah should purchase machinery (e.g. considers short-term vs long-term, financial implications vs non-financial, impact on USP, alternative solutions, ultimately judges if it is worthwhile considering the benefits and drawbacks). (Ev)
Maximum of 4 marks if no evaluation. Balanced argument required for top marks.