Explain four functions of management carried out by Kaari.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2021). The mark or mark type is shown in brackets.

1. [1] Function: Planning - setting aims for the business such as sales targets of increasing output of 3 large items of playground equipment per week.
2. [1] Function: Organising - Kaari organises the tasks for the 3 employees.
3. [1] Function: Coordinating - the tasks for the job production.
4. [1] Function: Commanding - Kaari instructs the employees on how to manufacture the new unique product.
5. [1] Function: Controlling - Kaari controls the employees so that 15 small items of playground equipment for home use is produced each week.
6. For each function named, up to [1] additional mark for explanation in context.
7. [1] Produce only large items: Revenue per week $1000 × 3 = $3000 (L1).
8. [1] Produce only large items: Cost per week $500 × 3 = $1500 (L1).
9. [2] Produce only large items: (Gross) profit $3000 – $1500 = $1500 (L2).
10. [2] Produce only large items: (G)PM = 50% (L2).
11. [1] Produce only large items: Government increased spending on children's playgrounds – increased demand for PPE equipment – increases PPE sales of large item products.
12. [1] Produce only large items: Government spending $10m improving children's playgrounds at $5000 each = 2000 playgrounds – this requires a large increase in output for PPE.
13. [1] Produce only large items: (Gross) profit margin on small items of equipment is higher at 75% instead of 50%.
14. [1] Produce only large items: Profit is lower for small items and therefore more profit made if only sold large items.
15. [1] Produce only large items: PPE equipment in playgrounds may increase sales to retailers as well as government spending – as improved reputation.
16. [1] Produce only large items: PPE may have to increase production facilities to meet increased demand.
17. [1] Produce only large items: The Government may spend on competitors' products may affect PPE in a negative way if more competitors' products appear in playgrounds.
18. [1] Produce only large items: May only be a one-off purchase.
19. [1] Produce only small items: Revenue per week $100 × 15 = $1500 (L1).
20. [1] Produce only small items: Cost per week $25 x 15 = $375 (L1).
21. [2] Produce only small items: (Gross) profit $1500 – $375 = $1125 (L2).
22. [2] Produce only small items: (G)PM = 75% (L2).
23. [1] Produce only small items: Smaller profit than large items but market is growing.
24. [1] Produce only small items: Growing trend from parents to purchase small items of equipment – increased demand in the long term.
25. [1] Produce only small items: Need to make an additional 5 small products each week to match the weekly profit of the large items which may require additional skilled labour.
26. [1] Conclusion: The increases in demand from government will prompt PPE to increase sales of large items of playground equipment. Higher profit for large items of playground equipment. If PPE can expand production, then increased government spending is likely to have the greatest effect on profit even though there may be some increased expenses from the need to borrow for expansion.
27. [1] Conclusion: Small items of playground equipment should be chosen as, even though large items have higher profit initially, the demand for small items has an increasing trend for higher sales in the future. Whereas large items only have an increase in spending for one period of time.