P & P has decided to use batch production to produce the new paint. Identify and explain two factors which may have influenced this decision.

Mark scheme

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

1. [1] Knowledge [1] - award one mark for each relevant factor (maximum of two).
2. [1] Analysis [1] - award one mark for a relevant explanation for each factor (maximum of two).
3. [2] Application [2] – award two application marks for each factor (maximum of four).
4. Possible factor: Size of the output/ level of demand.
5. Possible factor: Various styles of product made.
6. Possible factor: Easier/quicker to respond to changes in demand.
7. Possible factor: Not enough capital to use capital-intensive methods.
8. Award a maximum of three additional marks for each explanation – 2 of which must be applied to this context – of the factor which may have influenced the decision to use batch production.
9. Indicative response: Size of the output [k] as if a large output is not required then flow production will not be used as too many products will be produced (an). Paint has many colours and types and so only a certain quantity of one type will be needed (ap). P & P will produce a certain amount of, for example bathroom paint and then a certain amount of kitchen paint because the demand will not be high for all types of paint (ap).
10. Relevant points for (b) might include:
11. Option A – $150000 × 10% = cost of $15000 interest per year.
12. Option B – $75000 × 10% = cost of $7500 interest/yr plus $10000 = $17500/year.
13. Option A land cost + factory + machinery = $150 000 (L1)
14. Option B land cost + lease = $85000 (L1)
15. Option B will be $72500 cheaper in the first year (L2)
16. Option A Output 200000 (appendix 2)
17. Option A Cost $100000 (appendix 2)
18. Option A Factory + machinery $50000 (appendix 2)
19. Option A Lease
20. Option A Interest paid $15000 (L2)
21. Option A Total cost in the first year $165000 (L2)
22. Option A Cost per tin $0.83 (L2)
23. Option B Output 102500 (appendix 2)
24. Option B Cost $75000 (appendix 2)
25. Option B Lease $10000 (appendix 2)
26. Option B Interest paid $7500 (L2)
27. Option B Total cost in the first year $92 500 (L2)
28. Option B Cost per tin $0.90 (L2)
29. [1-3] Level 1: Option A and B outlined including comparison of costs/use of cost information.
30. [4-6] Level 2: Option A and B discussed including calculation of costs.
31. [7-8] Level 3: Some limited judgement shown in recommendation as to the best option to choose.
32. [9-10] Level 3: Well justified recommendation as to the best option to choose compared to the alternative option.
33. [1] Level 1 - 1 mark for each L1 statement (max of 3 marks) e.g. Option A is more expensive than Option B.
34. [5] Level 2 – 1 × L2 explanation can gain 4 marks and a further mark can be awarded for each additional L2 explanation (Max 6 marks). Option A is more expensive than Option B but when calculating the costs per tin then Option A is cheaper at $0.83 per tin compared to Option B of $0.90 per tin.
35. [2] Award up to 2 additional marks for relevant application.