SSG manufactures mobile (cell) phones using batch production. Quality control is important. SSG has 130 employees who all receive on-the-job training. The Marketing Manager is analysing cost and output data for product X. An extract is shown in Table 1.1. As product X is in the maturity stage of the product life cycle SSG is considering possible extension strategies. Table 1.1 Extract from SSG's cost and output data for product X | Item | Value | |:---|:---| | Rent and other expenses per month | $300 000 | | Variable cost per unit | $80 | | Output per month | 12000 |

Mark scheme

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

1. [2] Training at the place of work, watching or following an experienced employee
2. [2] OR Training at the place of work – usually the person does the actual job while an experienced employee observes and guides him or her, making corrections as required
3. [1] Partial definition e.g. training while you are working
4. Accept: Watching a more experienced worker doing the job [2]
5. [2] Correct answer: $960 000
6. [1] Method e.g. Variable cost per unit times output
7. [1] OR $80 × 12 000
8. If correct answer given with no working shown award 2 marks.
9. $ sign not required.
10. [1] Amount of capital available / costs (of machinery/production)
11. [1] Demand / size of the market / how much they are likely to sell / output needed
12. [1] Nature / type / variety of goods produced
13. [1] Amount of suitable space / storage
14. [1] Access to (suitable/skilled) labour / amount of labour needed
15. Award 'size of business' [BOD]
16. [k] Tries / may eliminate errors before customers receive the product; [an] improving the reputation; [app] of its phones
17. [k] All workers do not need to be trained for quality control; [an] reducing costs; [app] of its 130 employees
18. [k] Production is not slowed
19. [k] Inspectors / someone needs to be employed to check the product; [an] increasing labour costs
20. [k] Faulty products must be scrapped; [an] therefore variable cost is higher; [app] than $80 per unit
21. [k] Does not identify where / why the fault has occurred; [k] so vulnerable to repeating the errors
22. [k] There is less reason for employees to help ensure quality; [k] leading to more faults in products
23. [k] Product appears more appealing; [an] attracting new / more customers or sales; [an] increasing revenue
24. [k] High cost of development / market research; [an] which the business may not be able to afford
25. [k] Customers may dislike changes; [an] reducing sales
26. [k] Adds value to product; [an] therefore can charge a higher price
27. [k] Finding new markets; [an] widening customer base
28. [k] Adapt / change the packaging; [an] improving the appeal; but existing customers may not recognise the product
29. [k] Increase advertising / marketing / promotion; [k] remind customers that the product still exists
30. [k] Sell through additional outlets
31. Adding new features involves high development costs [k] which the business may not be able to afford [an]. Finding new markets [k] could increase sales revenue [an]. There is a risk that customers may not like the new features [eval] so it's safer and cheaper to try to find new markets. [eval]