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    4054 Enterprise Component 1 - Insert - Mock Exams 2024

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    4054 Enterprise Component 1 - Insert - Mock Exams 2024

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    4054 Enterprise Component 1 -Insert -Mock Exams 2024

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    4054 Enterprise Component 1 - Insert - Mock Exams 2024

    Uploaded by

    adrianaperrine318
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    © All Rights Reserved
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    Download as docx, pdf, or txt
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    PATTEN COLLEGE

    ENTERPRISE 4054 / 12
    Component 1 MOCK EXAMINATIONS 2024
    Insert 1 hour 30 minutes
    Ryan’s campervan conversion enterprise
    The background
    Ryan is a carpenter. He found it difficult to find a job in his local area due to high
    unemployment. Ryan decided to travel around the country to find work. To save
    money on accommodation, he planned to sleep in his van.
    Ryan wanted to make the van more comfortable before starting his journey. His
    carpentry skills were useful in completing most of the tasks. However, as he is
    not a qualified electrician or plumber, Ryan used online videos produced by
    another entrepreneur to help him build a small kitchen and bathroom in the van.
    The idea
    When he had completed the van conversion, Ryan posted photos of his
    campervan onto a social media site. He received positive comments about the
    quality of his work.
    Eesh was one of the people who viewed Ryan’s photos on social media and left
    positive comments. He was so impressed that he emailed Ryan to discuss how
    much he would charge to convert a van into a campervan.
    Ryan agreed to convert Eesh’s van for a fee of US$900. Ryan completed Eesh’s
    conversion in two weeks. Eesh was satisfied with the quality and the price that he
    paid for the van conversion. He recommended Ryan to his friends. Ryan realised
    this could be an excellent opportunity for an enterprise, if more people would pay
    him to convert their vans into campervans.
    Ryan created an advertisement using photos of Eesh’s campervan, which he
    posted on social media. However, Ryan forgot to ask Eesh’s permission before
    using the photos. This advertisement attracted potential customers. Ryan was
    soon spending most of his time converting vans into campervans.
    The problem
    After a busy year completing many van conversions, Ryan was disappointed with
    the amount of money he had earned from the enterprise. He had been earning a
    higher wage as a carpenter. Although he enjoyed creating campervans, Ryan
    needed more money. He could not understand why he was not earning as much
    money in his enterprise as in his previous job. He decided to arrange a meeting
    with his bank manager to ask for her advice.
    The meeting
    At the meeting, the bank manager asked to see Ryan’s financial records. He did
    not have any financial records, other than receipts for raw materials purchased.
    The bank manager explained that there were many reasons why an enterprise
    should keep financial and non-financial records. Keeping these records would
    help to reduce the risks involved in operating an enterprise. She outlined some of
    the financial records that Ryan should keep and how they would help him in his
    enterprise.
    The bank manager then asked Ryan the price he charged for each van conversion
    and the amount he spent on raw materials. Ryan explained that he charged a fair
    price of US$900 and on average he spent US$550 on each van, although
    sometimes he spent more. As a carpenter, Ryan had been paid a wage of US$4.40
    per hour. He would expect the same hourly wage from the campervan conversion
    enterprise. The bank manager suggested that they arrange another meeting to
    complete the financial records normally kept by an enterprise.
    The research
    After the meeting with the bank manager, Ryan began to doubt whether he had
    the enterprise skills needed to be successful. He was not sure that he should
    continue with the van conversion enterprise. However, before giving up on his
    enterprise, Ryan decided to research some of the financial records the bank
    manager had outlined. Ryan found a template for a cash flow forecast.
    Table 1 shows this template.
    Table 1
    Cash flow forecast
    US$
    Cash inflow:
    Sales revenue
    Cash outflow:
    Raw materials
    Wages
    Fuel
    Net cash flow
    Ryan then decided to use the internet to find other enterprises that completed
    campervan conversions. He was determined to be fully prepared for the next
    meeting with the bank manager.

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