Refer to Table 1.1 and other information. Calculate the change in forecast profit if the new product is launched.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2023). The mark or mark type is shown in brackets.

1. Profit with new product – profit without new product OR [(TR-TC new) – (TR-TC old)]
2. Profit before new product = 40 – (26 + 6) = $8m
3. Profit after new product introduced: Revenue = 40 + 30% = 52
4. Direct costs + indirect costs = 32 + 6 + 1 = 39
5. 52 – 39 = $13 m
6. Change in profit = 13 – 8 = $5 m (accept 5)
7. Note: may calculate the percentage change which is 62.5% (5/8 × 100).
8. [3] Correct answer: 5 or 62.5%
9. [2] Both of the following: Correct/implied formula [Profit with new product-profit without new product] AND Correct calculation of either new revenue (52); Correct calculation of new costs (39); Correct calculation of original profit (8); new profit (13) OR An incorrect answer with one mistake allowing OFR for final stage.
10. [1] One of the following: Correct/implied formula OR Correct calculation of the change in total revenue (100)