PP90 plc is a business that manufactures plastic packaging materials. Fig. 2 shows an extract from its Profit and Loss Account (Income Statement) for 2017. Fig. 2 Profit and Loss Account PP90 plc Profit and Loss Account for 2017 $m Sales (revenue) 900 Cost of sales 550 Gross profit 350 Expenses ? Net profit (profit for year) 140 Use Fig. 2 to help you answer the following questions.

Mark scheme

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

1. [2] 210 (2) Method 350 – 140 (1)
2. Yes: It is a source of capital / can be used for reinvestment (1) that does not need to be repaid (1) and can be used for future growth (1) e.g. machinery (1)
3. Yes: Shareholders want dividends (1) as a return on their investment (1) to attracts future investors/shareholders (1) as potential investors see profit as success (1)
4. No: Ethically based companies / not-for-profit organisations (1) whose primary purpose is not to make a quick profit (1) and wants to source its materials in a responsible way (1) and pay its workers a fair wage (1)
5. [1] Plastic packaging is strong/lightweight/flexible/durable/long life use/easier to carry/water-resistant/can put several items in one package/cheaper than glass or tin/hygienic/can advertise of packaging/prevents damage
6. [2] 1 mark for effect and 1 mark for explanation Plastic packaging is non-biodegradable/toxic (1) which pollutes land/air/water (1) is just thrown away (1) leading to pollution(1) Plastic packaging placed in landfill / not recycled (1) emits hazardous gases (1) remains in the ground for years (1) difficult to decompose (1) Can lessen the growth of plants (1) by blocking the absorption of minerals/water (1) Plastic dumped in water (1) can contaminate fish life (1) Animals die (1) from ingesting plastic (1)
7. Destination/distance is important because landlocked countries cannot use sea transport, mountainous regions are often only accessed by air transport and roads can be poor / difficult terrain in some countries and some countries may be far away
8. Trans-shipment of goods between different forms of transport at ports/airports
9. Costs - because if it is too expensive if will lower profit margin
10. Laws/regulations/duty imposed by countries importing the products
11. Reliability / efficiency of transport method
12. Quantity/nature/type/security/urgency/convenience of goods to be transported
13. Evaluation: Generally, much depends on the distance and the type of goods to be transported between countries because the longer the distance the greater the costs and more possible risks. However, plastic packaging is not likely to be expensive or heavy, nor is it likely to be stolen so the destination and trans-shipment factors will be most important to PP90 when transporting to other countries.