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The document consists of various questions related to production methods, quality control, inventory management, and financial analysis in manufacturing businesses. It includes specific scenarios involving companies like FBW, WFH, SSG, HCB, and VDN, asking for calculations, definitions, and explanations of concepts. The questions aim to assess understanding of production processes, financial health, and strategic decision-making in a business context.

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Tinashe Shana

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0% found this document useful (0 votes)

13 views11 pages

My Test

Uploaded by

Tinashe Shana

We take content rights seriously. If you suspect this is your content, claim it here.

Available Formats

Download as DOCX, PDF, TXT or read online on Scribd

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1

1 Identify two methods of production.

Method 1: ................................................................................................................................................

..................................................................................................................................................................

Method 2: ................................................................................................................................................

.................................................................................................................................................................. [2]

[Total: 2]

2
Deﬁne ‘quality control’.

..................................................................................................................................................................

.................................................................................................................................................................. [2]

[Total: 2]
2

3 FBW manufactures watches using job production. It employs 5 full-time production employees. Each
worker
is offered regular training. Last year FBW sold 600 watches. The Managing Director plans to use break-
even
analysis to help decide whether to increase the price of its products. FBW’s current break-even chart is
shown
below.

Calculate the following values using the chart:

Break-even output: ..................................................................................................................................

..................................................................................................................................................................

Break-even avenue: .................................................................................................................................

.................................................................................................................................................................. [2]

[Total: 2]

4
Deﬁne ‘quality control’.

..................................................................................................................................................................

.................................................................................................................................................................. [2]

[Total: 2]
3

5 WFH produces hats and sells them to a mass market. It holds a high level of inventory. The Managing Director
is concerned about the liquidity of the business and has been analysing WFH’s ﬁnancial statements. An
extract is shown in the table below. The Managing Director thinks that the business might fail. Other
stakeholder groups might also be interested in WFH’s ﬁnancial statements.

Extract from WFH’s ﬁnancial statements ($000)

2021 2022

Current assets 60 50

Inventory 20 30

Trade receivables 25 10

Cash 15 10

Current liabilities 20 40

Proﬁt/loss 15 (10)

Identify four reasons why businesses hold inventory.

Reason 1: .................................................................................................................................................

..................................................................................................................................................................

Reason 2: .................................................................................................................................................

..................................................................................................................................................................

Reason 3: .................................................................................................................................................

..................................................................................................................................................................

Reason 4: .................................................................................................................................................

.................................................................................................................................................................. [4]

[Total: 4]

6 HCB manufactures cars in country X. It has 200 employees working in its factory. The business has changed
its method of production due to new technology. HCB’s Managing Director is considering ways to become
more ethical. She is aware that other businesses in country X have started to import cars. The interest rate in
country X has increased due to rising inﬂation.

Identify two ways technology could change production methods.

Way 1: ......................................................................................................................................................

..................................................................................................................................................................

Way 2: ......................................................................................................................................................

.................................................................................................................................................................. [2]
4

[Total: 2]

7 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 the table below. As product X is in the maturity stage of the product life
cycle SSG is considering possible extension strategies.

Extract from SSG’s cost and output data for product X

Rent and other expenses per month $300 000

Variable cost per unit $80

Output per month 12 000

Calculate total variable cost per month. Show your working.

..................................................................................................................................................................

.................................................................................................................................................................. [2]

[Total: 2]
5

8 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 the table below. As product X is in the maturity stage of the product life
cycle SSG is considering possible extension strategies.

Extract from SSG’s cost and output data for product X

Rent and other expenses per month $300 000

Variable cost per unit $80

Output per month 12 000

Identify four factors a business should consider when deciding which method of production to use.

Factor 1: ...................................................................................................................................................

..................................................................................................................................................................

Factor 2: ...................................................................................................................................................

..................................................................................................................................................................

Factor 3: ...................................................................................................................................................

..................................................................................................................................................................

Factor 4: ...................................................................................................................................................

.................................................................................................................................................................. [4]

[Total: 4]
6

9 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 the table below. As product X is in the maturity stage of the product life
cycle SSG is considering possible extension strategies.

Extract from SSG’s cost and output data for product X

Rent and other expenses per month $300 000

Variable cost per unit $80

Output per month 12 000

Explain one advantage and one disadvantage to SSG of using quality control.

Advantage: ...............................................................................................................................................

..................................................................................................................................................................

Explanation: ............................................................................................................................................

..................................................................................................................................................................

Disadvantage: ..........................................................................................................................................

..................................................................................................................................................................

Explanation: ............................................................................................................................................

..................................................................................................................................................................

.................................................................................................................................................................. [6]

[Total: 6]
7

10 GBR manufactures shoes. The method of production used means GBR can produce 18 000 pairs of shoes
each week. GBR is a limited company. Its main objective is to increase proﬁt. This objective can conﬂict

of its products. The directors are interested in the opportunities of globalisation for GBR.
with those of other stakeholder groups including GBR’s 450 employees. The business does not export any

Do you think the size of the market is the most important factor for a business to consider when deciding on
a method of production? Justify your answer.

..................................................................................................................................................................

.................................................................................................................................................................. [6]

[Total: 6]

11 Identify two examples of ﬁxed costs.

Example 1: ...............................................................................................................................................

..................................................................................................................................................................

Example 2: ...............................................................................................................................................

.................................................................................................................................................................. [2]

[Total: 2]
8

12 MTD manufactures specialist cleaning products including soap. Batch production is used. The business
uses
just-in-time inventory control. MTD took 18 months to develop its latest environmentally friendly cleaning
product. The Marketing Manager has to decide on the packaging and method of promotion for this new
product. She said: ‘All our stakeholders, including pressure groups, are important. MTD wants to
contribute
to sustainable development.’

Explain two possible advantages to MTD of using just-in-time inventory control.

Advantage 1: ............................................................................................................................................

..................................................................................................................................................................

Explanation: ............................................................................................................................................

..................................................................................................................................................................

Advantage 2: ............................................................................................................................................

..................................................................................................................................................................

Explanation: ............................................................................................................................................

..................................................................................................................................................................

.................................................................................................................................................................. [6]

[Total: 6]
9

13 VCG manufactures high-quality briefcases and travel bags. VCG has 50 skilled production workers in its
factory. VCG is planning to expand by building a second factory. Different locations are being considered.
The Managing Director is reviewing VCG’s ﬁnancial statements. An extract is shown in the table below.
Both internal and external stakeholder groups of VCG are interested in this information.

Extract from VCG’s 2021 ﬁnancial statements ($)

Revenue 2 000 000

Current assets 300 000

Current liabilities 250 000

Shareholders’ equity (funds) 800 000

Do you think access to labour is the most important factor for a manufacturing business to consider when
deciding where to locate a new factory? Justify your answer.

..................................................................................................................................................................

.................................................................................................................................................................. [6]

[Total: 6]
10

14 The economy of country C is experiencing economic growth. Based on secondary market research data,
Samuel started a plumbing business. His business installs and repairs bathroom equipment. Samuel operates
as a sole trader. He used all his $500 savings to buy the tools needed. Samuel had to decide on a suitable
pricing method to use. He thinks that providing a good quality service could help his business to increase
added value.

Outline how providing a good quality service could help Samuel’s business increase added value.

..................................................................................................................................................................

.................................................................................................................................................................. [4]

[Total: 4]
11

15 VDN is a private limited company. One of VDN’s objectives is to be ethical. VDN produces ofﬁce
products
including pens and paperclips. All raw materials are imported. The Managing Director plans to introduce
new machinery to help lower average costs. This will require training for VDN’s 380 employees. The
Managing Director also wants to introduce Kaizen into the factory.

Explain one advantage and one disadvantage to VDN of introducing Kaizen.