Neil and Jin need to tell employees about the new service.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2019). The mark or mark type is shown in brackets.

1. [2x1] Knowledge – award one mark for each advantage / disadvantage
2. [2x1] Analysis - award one mark for a relevant explanation for each advantage/ disadvantage
3. [2x2] Application – award two application marks for each advantage/disadvantage
4. Answers are likely to include:
5. Advantage: Written record – can refer back to the details; Cheap to send to all employees; Quicker to send to large number of people at once; Able to provide detailed information
6. Disadvantage: Message may not have been understood/language barriers; No chance for clarification by employees; No internet access; No body language/cannot see the reaction; Not sure if the message has been received
7. Indicative response: Emails are cheap to send (1) and can easily be sent to all employees. (1) They can be told about the new catering service (ap) and the email can include all the details about offering catering for weddings or birthday parties. (ap)
8. Possible application marks: Catering services; two shareholders; weddings; birthday parties; events; provides catering for businesses such as for conferences; 90 part-time employees; 10 full-time employees; noticeboard; food.
9. Option 1 (Weddings) Level 1: Growing market as increased spending on weddings; Price is higher for Option 1 events; Variable costs are higher for weddings than birthday parties; Price per event is $30 higher for weddings; 250 more people attending each event than birthday parties
10. Option 1 (Weddings) Level 2: TR per event = $25 000; Variable costs per event = $10 000; Gross profit per event = $15 000; TC per event = $11 000; Profit per event = $14 000; TR per month = $250 000; Gross profit per month = $150 000; TC per month = $110 000; Profit per month = $140 000
11. Option 2 (Birthday parties) Level 1: Spending on birthday parties has remained the same; 90 more birthday parties per month than weddings; Fixed costs lower by $500 for birthday parties; Variable cost $10 cheaper than weddings per person
12. Option 2 (Birthday parties) Level 2: TR per event = $5000; Variable cost per event = $2500; Gross profit per event = $2500; TC per event = $3000; Profit per event = $2000; TR per month = $500 000; Gross profit per month = $250 000; TC per month = $300 000; Profit per month $200 000 per month
13. Note: Do not reward an answer that is just copied from the table in Appendix 3 without any comment
14. Recommendations might have points that include: Total cost of Option 2 is $8000 per event less than Option 1 so Option 2 is easier to finance; Option 2 - the profit for birthday parties per month is $60 000 higher than Option 1 – weddings; Option 2 has the highest profit per month; Option 1 has the highest profit per event; Birthday parties have the highest profit per month but the market appears to be not increasing; Option 1 has the higher growth in sales and the highest profit per event
15. Level 1 - 1 mark for each L1 statement (max of 3 marks) e.g. Weddings are $30 higher per person.
16. Level 2 – 1 × L2 explanation can gain 4 marks and a further mark can be awarded for each additional L2 explanation (max 6 marks) e.g. Weddings will give a profit per event of $14000. (L2)
17. Level 3 - For level 3 to be awarded there must be 2 × L2 correct calculations of profit then a well justified conclusion of which option to choose.
18. Award up to 2 additional marks for relevant application
19. Possible application marks: Catering services; two shareholders; wants to expand; weddings; birthday parties; events; provides catering for businesses such as for conferences; 90 part-time employees; 10 full-time employees; has a cash flow problem; imports food ingredients.