Rehana Recycles (RR) Rehana is very environmentally aware. One year ago, Rehana identified a business opportunity to reuse waste products and set up Rehana Recycles (RR) as a sole trader. A local company sells bottled drinks and reuses the empty glass bottles that are returned by customers. It cannot reuse any damaged bottles, so they are dumped as waste. Rehana asked this company if she could have the damaged glass bottles. The company agreed she could have them at no cost. RR melts down the glass and makes unique vases and other glassware products. RR's mission statement is 'Make waste beautiful'. Rehana markets her products as 'Lovely for the planet, lovely for you'. The business has a strong local brand image. Rehana has recently invested in marketing which focuses on her unique selling point of recycling waste. To help satisfy demand, Rehana recently employed two local artists who are also very environmentally aware. They are skilled in making handmade glass jewellery. RR currently makes handmade products using job production. Rehana has a democratic leadership style. Rehana has produced some financial data shown in Table 1.1. Table 1.1 Financial data $ $ Current assets Current liabilities Cash 2000 Trade payables 3000 Inventory 12000 Overdraft 5000 Total current assets 14000 Total current liabilities 8000 As demand has grown, Rehana needs to increase her output. Rehana has identified two ways of increasing output. She could either: • keep using job production and employ more artists to create unique glassware products using the RR brand, or • change to batch production and make a larger number of standardised glassware using the RR brand.

Mark scheme

Marking points from the official mark scheme (Feb/Mar 2022). The mark or mark type is shown in brackets.

1. [2] A correct definition
2. [1] A partial, vague or unfocused definition
3. [0] No creditable content
4. Content: One mark for understanding of the concept of aims and values (mission)
5. Content: One mark for understanding that it defines a company or organisation's reason for being (statement)
6. Accept any reasonable answer
7. Award one mark for each point of explanation:
8. [1] C: Example or some other way of showing good understanding
9. [1] B: Understanding that it is to do with direction/guidance/coordination etc.
10. [1] A: Understanding of the concept of participation
11. C marks dependent on A and B mark being present
12. Content: All members of the business take part in the decision-making process, often by voting.
13. Content: If Rehana is a democratic leader then she will ask for the local artists to help her make decisions.
14. Accept any reasonable answer
15. [3] Correct answer with or without correct working or $
16. [2] Attempt with correct figures
17. [1] Formula*/attempt to calculate
18. [0] No creditable content
19. Content: Current assets - stock / Current liabilities [1 mark – formula]
20. Content: (14000-12000) / 8000 [1 mark use of correct figures]
21. Content: Answer = 0.25:1 [3 marks - correct answer]
22. Common incorrect answers: 25% [3]
23. Common incorrect answers: 1/4 [3]
24. Common incorrect answers: 0.25 (no working) [3]
25. Common incorrect answers: 25 (no working) [0]
26. Common incorrect answers: CA / CL (14000 / 8000) = 1.75:1 [1]
27. Common incorrect answers: 2000 / 14000 [1]
28. Common incorrect answers: 1.75:1 (no working) [0]
29. Common incorrect answers: CL / CA - inventory (8000 / 2000) = 4:1 (400%) [2]
30. Common incorrect answers: 8000 / 2000 = 4 [0]
31. [3] Explanation of a method of improving liquidity, in context (2 APP)
32. [2] Explanation of a method of improving liquidity (2a K+K)
33. [1] Identification of a method of improving liquidity (1a K)
34. [0] No creditable content (0)
35. A01 Knowledge and understanding: Liquidity can be improved by: A method of increasing current assets (cash, inventory, trade receivables etc.): Sell fixed assets - for cash.
36. A01 Knowledge and understanding: Take out a long-term loan – to increase cash.
37. A01 Knowledge and understanding: Encourage prompt payment – to decrease trade receivables (debtors).
38. A01 Knowledge and understanding: Sell inventory – to increase cash (can improve liquidity if measured using the acid test).
39. A01 Knowledge and understanding: A method of decreasing current liabilities (overdraft, trade receivables, dividend payable etc.): Take out a long-term loan – to pay off the overdraft.
40. A01 Knowledge and understanding: Retain more profit – to avoid paying dividends
41. AO2 Application: Context of RR.
42. AO2 Application: Use of Table 1.1
43. Accept any reasonable answer
44. [4] Shows knowledge of two benefits of having a USP in context (2b K+A)
45. [4] Developed analysis of two benefits of having a USP in context (2b Analysis)
46. [3] Shows knowledge of one benefit of having a USP in context (2a K+A)
47. [3] Developed analysis of one benefit of having a USP in context (2a Analysis)
48. [2] Shows knowledge of two benefits of having a USP (1b K+A)
49. [2] Limited analysis of two benefits of having a USP (1b Analysis)
50. [1] Shows knowledge of one benefit of a USP (1a K+A)
51. [1] Limited analysis of one benefit of having a USP (1a Analysis)
52. [0] No creditable content (0)
53. A01 Knowledge and understanding: Knowledge of benefits may include: To sell more
54. A01 Knowledge and understanding: To increase the price
55. A01 Knowledge and understanding: Increase customer loyalty / repeat purchases
56. A01 Knowledge and understanding: Brand recognition
57. A01 Knowledge and understanding: To differentiate from competition
58. A01 Knowledge and understanding: To give a focus for the marketing mix
59. AO2 Application: RR is a sole trader / small business and is likely to have limited resources
60. AO2 Application: RR makes unique vases and glassware products
61. AO2 Application: RR's mission statement 'to make waste beautiful'.
62. AO2 Application: Markets products as 'lovely for the planet, lovely for you'.
63. AO2 Application: RR has a strong local brand image.
64. AO2 Application: RR's USP is recycling waste (assumption can be made that no other competitors do this).
65. AO2 Application: RR employs two local artists, who are environmentally aware.
66. AO2 Application: Employees are skilled.
67. AO2 Application: RR uses job production.
68. AO2 Application: Table 1.1.
69. AO2 Application: Demand has grown and Rehana needs to increase output.
70. AO2 Application: Rehana wants to increase output by either employing more artists or changing to batch production.
71. AO3 Analysis: Increase customer loyalty / repeat purchases: gives RR an established customer base and revenue stream – more likely to make Rehana's growth strategies successful.
72. AO3 Analysis: Brand recognition: means that customers who are looking for recycled products are more likely to purchase RR's vases – increasing Rehana's incomes/profit.
73. AO3 Analysis: To differentiate from competition: likely to be a competitive market and RR may need customers to recognise their recycled products so that sales increase – so that Rehana can reinvest more profit and grow the business.
74. AO3 Analysis: To give a focus for the marketing mix: the 'lovely for the planet, lovely for you' marketing slogan shows a double benefit to making a purchase, meaning that Rehana may be able to charge a higher price – increasing her income/profit.
75. Accept any reasonable answer
76. [7] Justified evaluation based on argument in context.
77. [6] Developed evaluation based on argument in context.
78. [5] An evaluative statement based on argument in context.
79. [4] Argument based on two pieces of developed analysis about RR's decision to change production method.
80. [3] Argument based on one piece of developed analysis about RR's decision to change production method.
81. [4] Applies context to understanding of two pieces of knowledge about job/batch production.
82. [3] Applies context to understanding of one piece of knowledge about job/batch production.
83. [2] Shows two pieces of knowledge about job/batch production.
84. [1] Shows one piece of knowledge about job/batch production.
85. [0] No creditable content.
86. A01 Knowledge and understanding: Knowledge of job production may include: On-off unique products
87. A01 Knowledge and understanding: Produced one at a time
88. A01 Knowledge and understanding: Knowledge of batch production may include: Production in groups, not individual or mass/flow
89. A01 Knowledge and understanding: Whole batch passes through each stage of production at the same time
90. A01 Knowledge and understanding: Use of machinery
91. AO2 Application: RR is a sole trader / small business and is likely to have limited resources
92. AO2 Application: RR makes unique vases and glassware products
93. AO2 Application: RR's mission statement 'to make waste beautiful'.
94. AO2 Application: Markets products as 'lovely for the planet, lovely for you'.
95. AO2 Application: RR has a strong local brand image.
96. AO2 Application: RR's USP is recycling waste (assumption can be made that no other competitors do this).
97. AO2 Application: RR employs two local artists, who are environmentally aware.
98. AO2 Application: Employees are skilled.
99. AO2 Application: RR uses job production.
100. AO2 Application: Table 1.1.
101. AO2 Application: Demand has grown and Rehana needs to increase output.
102. AO2 Application: Rehana wants to increase output by either employing more artists or changing to batch production.
103. AO3 Analysis: For batch: will meet the increase in demand boosting revenue
104. AO3 Analysis: The only way to cost effectively increase her output
105. AO3 Analysis: Costs of recruiting skilled artists may be too expensive
106. AO3 Analysis: Against batch: Amount of raw materials (waste bottles) available may not be sufficient for expansion
107. AO3 Analysis: Impact on recent marketing focusing on USP may be negative
108. AO3 Analysis: Batch production/machinery skills of two local artists/herself may not be sufficient leading to waste
109. AO3 Analysis: Amount of liquidity available for investment (0.25:1 acid test ratio) may be too low for investment
110. AO3 Analysis: For job: Maintain USP of RR
111. AO3 Analysis: Utilise skilled workers who are already employed by RR
112. AO3 Analysis: Against job: High cost of skilled workers
113. AO3 Analysis: High unit cost for production of handmade products
114. AO3 Analysis: May not be able to meet demand
115. AO4 Evaluation: A recommendation about a whether RR should introduce batch production (or not).
116. AO4 Evaluation: A judgement over the relative suitability of production methods.
117. AO4 Evaluation: Elements that the recommendation/judgement could depend upon.
118. AO4 Evaluation: Weighing up of the impacts on RR of the change.
119. AO4 Evaluation: Weighing up of the likely advantages/disadvantages of batch production.
120. Accept any reasonable answer