Aisha opened a shop six months ago, selling homemade cakes and meat pies. She buys her meat pies from a wholesaler. Fig. 3.1 shows Aisha's trading figures for the two products sold. Cakes () Revenue 15600 Cost of sales 5000 Gross profit (i) Expenses 2600 Net profit (profit for the year) 8000 Meat pies () Revenue 35400 Cost of sales (ii) Gross profit 4200 Expenses 1480 Net profit (profit for the year) (iii) [Figure 3.1] Use Fig. 3.1 to help you answer the following questions.

Mark scheme

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

1. [1] (i) $10 600
2. [1] (ii) $31 200
3. [1] (iii) $2720
4. [1] Income received from sales/Quantity sold × Sales Price/money generated by business/amount earned/receipts from sales/total sales
5. [2] The wholesaler may not stock all the types of meat pies required (1) so Aisha will end up losing sales or having to look elsewhere for the pies (1)
6. [2] More expensive to use a wholesaler (1) which increases her costs/has to pay commission (1) compared to buying from a manufacturer (1)
7. [2] Will have to buy in bulk (1) which might be more than she needs or can afford (1) will need a warehouse (1) such as cold storage warehouse (1)
8. [2] No direct contact with the pie maker (1) so cannot tell them directly what is needed (1)
9. [2] Meat pies are perishable (1) might be less fresh/stale/expire buying from a wholesaler (1) especially if wholesaler does not have refrigerated warehouse (1) could affect her reputation (1)
10. [2] May have to pay for delivery (1) extra costs involved (1)
11. [1] Discount option: A quick way for Aisha to increase sales as customers like a good deal
12. [1] Discount option: Attracts new customers, especially for customers who are not sure about buying Aisha's cakes, who might then like the cakes and keep buying from her
13. [1] Discount option: Helps build a relationship with customers as customers will feel loyalty is recognised
14. [1] Discount option: Profit will be reduced unless the cost of $3 per cake can also be reduced by 20%
15. [1] Discount option: Aisha will receive $24 if all 10 cakes are sold
16. [1] Discount option: Discount may only attract customers who like a bargain and will not want to buy any more cakes after the offer finishes
17. [1] Discount option: Will there be many customers who wish to buy and consume 10 cakes?
18. [1] Website option: Helps to advertise Aisha's business as she can provide more details e.g. pictures of cakes, opening times
19. [1] Website option: Website can be seen more widely and 24/7
20. [1] Website option: Saves money on other advertising e.g. printing leaflets / local newspapers
21. [1] Website option: Website can be changed and updated easily
22. [1] Website option: It will cost $600 which a new business might not be able to afford
23. [1] Website option: Aisha will have to determine whether the $600 investment will result in sufficient increase in sales
24. [1] Website option: Design of website important to avoid order and delivery processing problems if it enables online sales
25. [1] Website option: As she is a local business dealing with local customers, a website might attract too many distant customers and she might not be able to meet such demand
26. [1] Evaluation: Discounts can be a great way to increase sales and widen her customer base with new customers. However, it is a short-term tactic whereas a website may be more long-term benefit. If she can afford the website, it will make her business look more professional and, if it offers online sales, orders may well increase from a wider customer base. In fact, with a combined profit of $10,270 on meat and cakes she could afford the website.