AQA AS BUSINESS Paper 1 Business 1 Friday 19 May 2023

AQA AS BUSINESS Paper 1 Business 1 Friday 19 May 2023 Morning Time allowed: 1 hour 30 minutes Materials For this paper you must have: • a calculator. Instructions • Use black ink or black ball-point pen. • Fill in the box at the top of this page. • Answer all questions. • You must answer the questions in the spaces provided. Do not write outside the box around each page or on blank pages. • If you need extra space for your answer(s), use the lined pages at the end of this book. Write the question number against your answer(s). • Do all rough work in this answer book. Cross through any work you do not want to be marked. Information • The marks for questions are shown in brackets. • The maximum mark for this paper is 80. Section A Answer all questions in this section. outside the box Only one answer per question is allowed. For each question completely fill in the circle alongside the appropriate answer. CORRECT METHOD WRONG METHODS If you want to change your answer you must cross out your original answer as shown. If you wish to return to an answer previously crossed out, ring the answer you now wish to select as shown. 0 1 A company decides to rely only on decision trees to decide whether to accept a project. If decisions are based on the financial outcome, what is the most important factor in these decisions? [1 mark] A Expected value B Initial cost C Net gain D Probability of success 0 2 When will a business’s corporate objectives be agreed? [1 mark] A After its mission and after its financial objectives B After its mission and before its financial objectives C Before its mission and after its financial objectives D Before its mission and before its financial objectives 0 4 A business manufactures one product on a large scale. If the business introduces mass customisation, which of the following is least likely to occur? [1 mark] A Greater responsiveness to changes in consumer tastes B Higher added value C More flexible machinery D Reduced unit costs 0 5 Statement 1: ‘Total revenue = Total costs + profit’ Statement 2: ‘Total contribution = (Contribution per unit × quantity) + fixed costs’ Read statements 1 and 2 and select the correct option from the following: [1 mark] A Statement 1 is true. Statement 2 is true. B Statement 1 is true. Statement 2 is false. C Statement 1 is false. Statement 2 is true. D Statement 1 is false. Statement 2 is false. Turn over ► box The table below shows four different scenarios. Scenario Change in interest rates Change in wages A Increase Increase B Increase Decrease C Decrease Increase D Decrease Decrease Which scenario is most likely to encourage a business to change from labour-intensive processes to capital-intensive processes? box [1 mark] A Scenario A B Scenario B C Scenario C D Scenario D 0 7 Figure 1 below shows a break-even chart. Figure 1 Which of the following changes would lead to a change of break-even output from E to F? [1 mark] A An increase in price and an increase in fixed costs. B An increase in price, an increase in fixed costs and a decrease in variable costs per unit. C A decrease in price and a decrease in variable costs per unit. D A decrease in price, an increase in fixed costs and a decrease in variable costs per unit. Turn over for the next question Turn over ► 0 8 Statement 1: ‘Introducing lean production can improve cash flow by reducing levels of inventory.’ Statement 2: ‘Introducing lean production can improve profitability by reducing waste.’ Read statements 1 and 2 and select the correct option from the following: [1 mark] A Statement 1 is true. Statement 2 is true. B Statement 1 is true. Statement 2 is false. C Statement 1 is false. Statement 2 is true. D Statement 1 is false. Statement 2 is false. 0 9 Which one of the following is not an extension strategy? [1 mark] A Attracting new market segments B Changing the image of a product C Increasing spending on promotions D Lowering unit costs Section B Answer all questions in this section. outside the box The following data applies to a business. Price of product £5 Variable cost per unit £3 Fixed costs £30 000 Number of sales of product 22 000 Calculate the margin of safety for the business. [3 marks] Explain one factor that will cause the share price of a public limited company to increase. [3 marks] Turn over for the next question *07* Turn over ► The table below shows data for the market for a product in 2020. box Business Sales (2020) Sales growth (2021) X £40 million 10% Y £100 million 50% Z £186 million 0% All other businesses £170 million 0% Total market size £496 million ? Calculate the market share of Business X in 2021. [4 marks] Explain one benefit to a newly established business of producing a budget. [4 marks] Turn over ► box Section C Answer all questions in this section. BZT Ltd Dean Beacon runs a family electricals business, BZT Ltd. BZT Ltd sells computers, mobile phones and household electrical items from its 15 high street stores. The stores are in prime, central locations which leads to high rent payments. BZT Ltd holds all of its inventory at its stores. Recently BZT Ltd has received poor online reviews. Dean knows online reviews now play a large part in how many customers choose a retailer. The poor reviews were due to BZT Ltd quickly selling out of products. Dean is considering holding more inventory to prevent selling out. There is a long lead time when BZT Ltd orders these products. The suppliers offer significant discounts for large orders. Currently BZT Ltd does not get these discounts as it only orders 70% of what is needed to qualify for the discount. Dean is concerned that profits fell in every one of the last three years. BZT Ltd’s competitors are now increasingly online only. Dean has carried out the following research comparing BZT Ltd to online competitors. Table 1 Dean’s research BZT Ltd Online competitors Inventory storage costs £200 per square metre £70 per square metre Average gross profit margin 32% 65% Last year’s change in profit margin from operations –4% +2% BZT Ltd is the only retailer in the market that provides a free three-year support service with every item. The business needs specialist staff to provide this service. The support provided includes: • setup • installation • cover of any repair costs for three years. BZT Ltd spends 10% of its marketing budget advertising this support service and spends over 70% promoting its traditional price match promise. The price match promise means that BZT Ltd will always lower the price of any product to match that of any competitor offering the same product. Dean believes the business is widely recognised for its price match promise which it has offered for over 50 years. Dean has discovered the fastest-growing demographic in the market is the over 60s. The over 60s now account for over 30% of sales. Dean has carried out the following additional research on the market. outside the box BZT Ltd Online competitors Average age of customers 62 28 Average price elasticity of demand –0.4 –1.8 Percentage of customers expressing an interest in a support service 68% 6% Turn over ► box . Dean is considering removing BZT Ltd’s price match promise and focusing more on its free support service instead. box To what extent do you think this is the right decision? [16 marks] Extra space Turn over ►