Paper 1: Operating in a local business environment
Case study: The Crafty Kitchen
Sam Okafor and Ali Brennan run The Crafty Kitchen, a bakery-café in York, as a partnership. They sell bread, cakes and lunches, and run weekend baking classes. In a typical week they sell 2400 items at an average price of £3.50. Average variable cost is £1.40 per item and fixed costs are £3800 a week.
Customers rate the café highly online, but many tourists only visit once. Sam wants to open a second café in Harrogate; Ali would rather expand delivery through apps and sell bread to local shops. A second café would need a £60 000 bank loan. They are also considering becoming a private limited company.
Next month's cash-flow forecast shows an opening balance of £5000, inflows of £34 000 and outflows of £37 500, partly because of new ovens. They find it hard to recruit skilled bakers; two left last year for higher pay at a supermarket bakery.
11 mark
A sole trader has:
21 mark
Which is an internal stakeholder?
31 mark
A firm's sales are £2m in a market worth £40m. Its market share is:
41 mark
Which is primary research?
51 mark
At which stage are sales usually highest?
61 mark
Price £12, variable cost £7. Contribution per unit is:
71 mark
Fixed costs £20 000 and contribution £5 per unit. Break-even output is:
81 mark
Output 3600 units, maximum 4800 units. Capacity utilisation is:
91 mark
40 workers produce 12 000 units. Labour productivity is:
101 mark
According to Herzberg, which is a hygiene factor?
111 mark
Revenue £50 000 and cost of sales £30 000. Gross profit is:
121 mark
Which would improve cash flow?
131 mark
Actual costs are higher than budgeted. The variance is:
141 mark
Inflation caused by rising raw material prices is:
151 mark
Price rises 10% and quantity demanded falls 20%. PED is:
Case study: The Crafty Kitchen
Sam Okafor and Ali Brennan run The Crafty Kitchen, a bakery-café in York, as a partnership. They sell bread, cakes and lunches, and run weekend baking classes. In a typical week they sell 2400 items at an average price of £3.50. Average variable cost is £1.40 per item and fixed costs are £3800 a week.
Customers rate the café highly online, but many tourists only visit once. Sam wants to open a second café in Harrogate; Ali would rather expand delivery through apps and sell bread to local shops. A second café would need a £60 000 bank loan. They are also considering becoming a private limited company.
Next month's cash-flow forecast shows an opening balance of £5000, inflows of £34 000 and outflows of £37 500, partly because of new ovens. They find it hard to recruit skilled bakers; two left last year for higher pay at a supermarket bakery.
16(a)2 marks
State what is meant by unlimited liability.
16(b)4 marks
Calculate The Crafty Kitchen's weekly profit.
16(c)6 marks
Explain two advantages to Sam and Ali of becoming a private limited company.
16(d)9 marks
Analyse how market research could help Sam and Ali decide whether to open a café in Harrogate.
16(e)12 marks
Assess whether The Crafty Kitchen should use cost-plus pricing or competitive pricing.
16(f)16 marks
Evaluate whether The Crafty Kitchen should open a second café in Harrogate or expand delivery and wholesale sales instead.
17(a)4 marks
Calculate the closing balance for next month and explain what it shows.
17(b)12 marks
Assess the most effective way for The Crafty Kitchen to recruit and retain skilled bakers.
Finished?
Answer every question to finish (23 left), or finish when the time’s up.
Score 0 / 80 · 0 of 23 marked
This paper is written by Plasmo in the style of the OCR A-Level Business exam. It is not a past paper and is not produced or endorsed by the exam board.
OCR A-Level Business Mock Exam: Paper 1: Operating in a local business environment | Plasmo