Brimstone is a manufacturer of electrical goods such as cookers and refrigerators. Brimstone sells its goods through wholesalers in the home market and abroad. The pie chart in [Figure 2] shows the percentage of Brimstone's sales turnover in different parts of the world. Total sales in 2015 were $4 million. [Figure 2] Percentage of Brimstone's sales in different parts of the world in 2015 Other 5% Africa 13% Europe 20% Asia 25% Home 37%

Mark scheme

Marking points from the official mark scheme (May/June 2016). The mark or mark type is shown in brackets.

1. [2] (a) Two marks for correct calculation (One mark for identifying correct percentage if calculation incorrect)
2. Asia (25%) or correct figure for total sales ($4million) (1)
3. 25% of $4 million = $1 million (1)
4. [2] (b) (i) Any two points
5. A manufacturer changes raw materials (1) into goods.(1)
6. A manufacturer is a business in the secondary sector (1) making/producing goods (1)
7. Has a factory (1) using machines (1)
8. Accept any other relevant point
9. [4] (ii) Two marks for each explained reason
10. Wholesalers buy in bulk (1) and then break down the product into smaller quantities for retailers (1) This means Brimstone have only a few customers buying larger amounts (1) thus cutting administration/transport costs (1)
11. Wholesalers pay storage costs/no need for a warehouse (1) reducing these costs for Brimstone (1) can continue production (1) ahead of demand (1)
12. Wholesalers may advertise/promote products (1) thus widening the market for Brimstone (1) and reducing their advertising costs (1)
13. Specialised sellers (1) experts in finding buyers (1) no need for Brimstone to have its own sales department (1)
14. Provide information/advice (1) on market trends/tastes
15. Pays promptly (1) keeps cash flow moving (1)
16. Accept any other relevant point
17. [6] (c) Level 2 (4-6 marks) Has discussed to what extent the home market is important to Brimstone and given reasoning (If a candidate has presented a one-sided argument on home trade, award 4 marks max.)
18. Level 1 (1-3 marks) Has commented on the statement
19. 37% of total sales to have market which is the largest sales to a particular area
20. Sales to home market will be relatively simple, with no export documentation and no need of knowledge of import rules and restrictions in other countries
21. Diversifying sales to other countries will reduce the risk of sales being hit by a drop in disposable income in one of the markets
22. Home market is important as Brimstone may have more control than in overseas markets, even though overseas in total now accounts for 63% of sales
23. Cheaper distribution costs likely in home market with less risk of bad debts
24. Greater risk of bad debts owing to greater distances
25. Accept any other relevant point
26. [3] (d) (i) Any three points
27. A Bill of Lading is an important document used when transporting goods by ship/sea (1)
28. It acts as an advice note (1) for the quantity/description of the goods (1) as a contract of carriage (1) as a receipt (1) from the shipping company to Brimstone
29. It is a document of title (1) When Brimstone sends the Bill of Lading to the purchaser overseas, the purchaser can claim ownership of the goods (1)
30. It is negotiable (1) and the purchaser can pass title to a 3rd party (1)
31. Accept any other relevant point
32. [3] (ii) Any three points
33. A credit note is issued by a seller when goods have been overcharged (1) or when faulty goods are returned (1) allow an example such as damaged goods or not the goods ordered (1)
34. decreasing the amount owed by the buyer (1) the buyer is owed money (1)
35. Accept any other relevant point