Katie's Cakes (KC) KC is a partnership, owned by Katie and her son James. KC makes birthday cakes. Each cake is made using job production. A customer will tell KC what filling they want and how to decorate the cake. There are three possible fillings for each cake. The proportion of annual revenue made from cakes with each filling is shown in Fig. 1. Fig. 1: Proportion of revenue generated from each cake filling – Annual revenue = $1m [Figure 1.0] Katie and James are considering stopping selling cakes with a jam filling. However they are concerned about reducing the product portfolio of the business. Katie is highly skilled and she does all of the cake production and decoration. James manages contact with customers and the business's finances. Demand has increased steadily in the past few months and KC now needs to recruit a new employee. James has created a job description to help the recruitment process (see Fig. 2). Fig. 2: Job description Job title: Assistant cake decorator The role requires someone who knows how to produce and decorate cakes. The employee should be young and have a driving licence. They should also be creative. The employee will be required to work from 8am to 6pm each day. Full training will be given. The rate of pay will be based on the level of experience of the employee.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2018). The mark or mark type is shown in brackets.

1. [2] B Quantity/at a given price/over a specific period of time
2. [1] A Willing/able to purchase
3. [0] No creditable content
4. [Content] The quantity/amount of a product that consumers are willing (not needs or wants) and able to purchase, at a given price or in a particular period.
5. [Content] A diagram of the demand curve without further explanation up to 1 mark
6. [2] (Exemplar) How much of a good or service (1) customers are willing to pay for (1)
7. [Rationale] Both A+B
8. [2] (Exemplar) Amount of the product (1) the customer is able to buy
9. [Rationale] Both A+B
10. [1] (Exemplar) Amount of people (0) willing to buy a product (1)
11. [Rationale] Only A here as it is not the amount of people but the quantity of the product
12. [0] (Exemplar) %change in demand %change in price
13. [Rationale] This is price elasticity of demand, not demand
14. [3] C Example or some other way of showing good understanding e.g. shared risk/responsibility/profits/losses/finance
15. [2] B Unlimited liability/lack of continuity
16. [1] A Two or more owners
17. [Content] A legal agreement between two or more people to jointly own, finance and run a business.
18. [Content] Unlimited liability unless a limited partner. Share risks, profits, losses and responsibilities.
19. [3] (Exemplar) Two or more people run a business together (1) usually with shared capital (1) They have unlimited liability (1)
20. [Rationale] Good, developed explanation
21. [2] (Exemplar) Two or more people run a business (1) and provide the capital (1)
22. [Rationale] Explanation ok but not developed
23. [2] (Exemplar) Run by at least 2 people (1) and does not have limited liability (1)
24. [Rationale] Again explanation ok but limited
25. [1] (Exemplar) Owned by two or more people (1) without the ability to sell shares to the public (0)
26. [Rationale] A mark for reference to ownership but the rest of the explanation seems to confuse this with a ltd company
27. [3] Correct answer, with or without working
28. [2] Attempt with correct figures
29. [1] Identification of Jam %
30. [0] No creditable content
31. [Content] Jam = 10% of sales revenue Total sales revenue = $1 m 10% of $1 m = $100 000
32. [3] (Exemplar) $100000
33. [Rationale] Correct answer
34. [2] (Exemplar) 100 - 90 = 10 (1) 1000000 (1)
35. [Rationale] Identifies 10% for jam and identifies correct sales revenue of £1m and attempts to apply but is incorrect
36. [2] (Exemplar) 100 = 10000
37. [1] (Exemplar) Jam is 10% of revenue
38. [Rationale] Only calculates jam%
39. [Content] Greater economies of scale from bulk buying more Cream and Chocolate
40. [Content] Specialisation by concentrating on Cream and Chocolate
41. [Content] May reduce customers due to a lack of variety – may not come to shop
42. [Content] Loss of 10% of sales revenue will it decrease costs much?
43. [Content] Customers may not be able to have what they want - goes against the job production format of the business.
44. [Content Advantages] Customers can have their cake personalised to their requirements – increase revenue/profits
45. [Content Advantages] Allows KC to charge a higher price
46. [Content Advantages] Higher quality cakes – increase word of mouth promotion for KC
47. [Content Disadvantages] Higher cost - requires specialist skills and inventory
48. [Content Disadvantages] Loss of economies of scale
49. [Content Disadvantages] Inventory is perishable but need to keep in stock, just in case
50. [Content Disadvantages] Higher price leading to lower demand
51. [Content] Specific job title – should only target those who are interested in this job. However, is it too specific - are KC likely to find enough of a pool of people?
52. [Content] Some of the items belong on a person specification.
53. [Content] Specific skills – produce and decorate cakes and creative.
54. [Content] Set hours of work – again should reduce the potential recruits – is it really seven days a week?
55. [Content] Why does the person need to be able to produce and decorate cakes when full training will be given?
56. [Content] Is it legal/ethical to state that the worker should be young? Why is this important?
57. [Content] No mention as to why the worker needs a driving licence?
58. [Content] Rate of pay is very vague – will this put potential applicants off?
59. [Content] Does not mention production method