M21-3-BUSMT-HP2-ENG-TZ0-XX

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Keycap Digit Two

Paper 2

Question 1 - MaximumMarks - 10

The Pie Store (TPS) is a business that bakes pies and sells them in three retail stores. The company has cleverly used the mathematical symbol π (pi) in its branding. In 2020, each store made a profit. The financial data for each store is summarized in the following table:

Question 1 - Table

Question 1 - A

This question asks you to describe one step in the development of a brand. Developing a brand involves several strategic steps to create a unique identity and position in the market.

Question 1 - A - Answer

One step in the development of a brand is conducting market research. Market research involves gathering, analyzing, and interpreting information about a market, including information about the target audience and competitors. This step helps the business understand the needs and preferences of its potential customers, identify market trends, and assess the competitive landscape. By doing so, the business can make informed decisions about how to position its brand, what unique selling propositions (USPs) to highlight, and how to differentiate itself from competitors.

Question 1 - A - Answer - EC

The candidate has correctly identified and described the importance of market research in the development of a brand. The explanation is clear and demonstrates an understanding of how market research informs branding decisions. This response effectively highlights the role of market research in understanding customer needs and the competitive landscape, which is crucial for successful brand development.

Question 1 - B - i

This question asks you to determine which store made the highest net profit before interest and tax. No working is required for this part.

Question 1 - B - i - Answer

Store 2 made the highest net profit before interest and tax.

Question 1 - B - i - Answer - EC

The candidate has correctly identified Store 2 as the store with the highest net profit before interest and tax. This response is accurate and concise, as required by the question.

Question 1 - B - ii

This question asks you to calculate which store had the highest profitability. You need to show all your working to arrive at the answer.

Question 1 - B - ii - Answer

To determine which store had the highest profitability, we need to calculate the net profit margin for each store. The net profit margin is calculated as follows: $\text{Net Profit Margin} = \frac{\text{Net Profit Before Interest and Tax}}{\text{Sales}} \times 100$ For Store 1: $\text{Net Profit Before Interest and Tax} = 90000 - 66000 = 24000$ $\text{Net Profit Margin} = \frac{24000}{180000} \times 100 = 13.33\%$ For Store 2: $\text{Net Profit Before Interest and Tax} = 103000 - 76000 = 27000$ $\text{Net Profit Margin} = \frac{27000}{223000} \times 100 = 12.11\%$ For Store 3: $\text{Net Profit Before Interest and Tax} = 85000 - 67000 = 18000$ $\text{Net Profit Margin} = \frac{18000}{170000} \times 100 = 10.59\%$ Therefore, Store 1 had the highest profitability with a net profit margin of 13.33%.

Question 1 - B - ii - Answer - EC

The candidate has correctly calculated the net profit margin for each store and identified Store 1 as having the highest profitability. The calculations are accurate, and the working is clearly shown, demonstrating a good understanding of how to calculate and interpret net profit margins. The final answer is presented as a percentage, which is essential for full marks.

Question 1 - C - i

This question asks you to calculate TPS' equity. Equity is calculated as the difference between total assets and total liabilities.

Question 1 - C - i - Answer

TPS' equity is calculated as follows: $\text{Equity} = \text{Total Assets} - \text{Total Liabilities}$ $\text{Equity} = 200000 - 120000 = 80000$ Therefore, TPS' equity is $80,000.

Question 1 - C - i - Answer - EC

The candidate has correctly calculated TPS' equity by subtracting total liabilities from total assets. The calculation is straightforward and accurate, and the final answer is clearly stated. This response demonstrates a good understanding of the basic accounting equation for equity.

Question 1 - C - ii

This question asks you to calculate TPS' return on capital employed (ROCE). You need to show all your working to arrive at the answer.

Question 1 - C - ii - Answer

To calculate TPS' return on capital employed (ROCE), we use the following formula: $\text{ROCE} = \frac{\text{Net Profit Before Interest and Tax}}{\text{Total Capital Employed}} \times 100$ From the table, we know the net profit before interest and tax for all stores combined is: $24000 + 27000 + 18000 = 69000$ Total capital employed is the sum of equity and long-term debt: $\text{Total Capital Employed} = \text{Equity} + \text{Long-Term Debt}$ $\text{Total Capital Employed} = 80000 + 50000 = 130000$ Now, we can calculate ROCE: $\text{ROCE} = \frac{69000}{130000} \times 100 = 53.08\%$ Therefore, TPS' return on capital employed (ROCE) is 53.08%.

Question 1 - C - ii - Answer - EC

The candidate has correctly calculated TPS' return on capital employed (ROCE). The working is clearly shown, and the final answer is presented as a percentage, which is essential for full marks. The response demonstrates a good understanding of how to calculate ROCE and interpret the result.

Question 1 - D

This question asks you to explain one effect that the $50,000 long-term debt may have on TPS' profit and loss account. Long-term debt can impact a company's financial statements in several ways.

Question 1 - D - Answer

The $50,000 in long-term debt would have to be repaid with interest. This interest expense would have three effects on TPS' profit and loss account: 1. The interest expense would be subtracted from net profit before interest and tax, thereby lowering TPS' net profit before tax. 2. The corporate tax rate would be applied to TPS' net profit before tax. Because this figure is lower than it would have been had TPS not had an interest expense, TPS' income tax expense is reduced. Therefore, while the interest expense reduces net profit before tax, it also reduces the income tax expense, partially offsetting the impact on the overall net profit.

Question 1 - D - Answer - EC

The candidate has correctly identified and explained the effects of the $50,000 long-term debt on TPS' profit and loss account. The explanation is clear and demonstrates an understanding of how interest expenses impact net profit before tax and income tax expense. This response effectively highlights the dual impact of interest expenses on a company's financial statements.

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Higher Level

Business Management HL

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Standard Level

Mathematics AA SL

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Business Management SL

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Core

Theory of Knowledge

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Ab Initio

Spanish Ab Initio

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Biology SL

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Physics HL

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Chemistry HL

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Chemistry SL

Economics HL

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Economics SL

History HL

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History SL

Geography SL

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Geography HL

Mathematics AI HL

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Mathematics AI SL

Biology HL

Psychology SL

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Psychology HL

Design Technology SL

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Design Technology HL

Physics SL

Mathematics AA HL

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Environmental Systems & Societies SL

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Sports, Exercise & Health Science HL

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Sports, Exercise & Health Science SL

English B SL

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English B HL

English A Language & Literature HL

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English Literature SL

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English A Language & Literature SL

English Literature HL

Spanish B SL

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Question 2 - MaximumMarks - 10

Question 2 - Table

Question 2 - A

Question 2 - A - Answer

Question 2 - A - Answer - EC

Question 2 - B

Question 2 - B - Answer

Question 2 - B - Answer - EC

Question 2 - C

Question 2 - C - Answer

Question 2 - C - Answer - EC

Question 2 - D

Question 2 - D - Answer

Question 2 - D - Answer - EC

Question 3 - MaximumMarks - 10

Question 3 - A

Question 3 - A - Answer

Question 3 - A - Answer - EC

Question 3 - B

Question 3 - B - Answer

Question 3 - B - Answer - EC

Question 3 - C

Question 3 - C - Answer

Question 3 - C - Answer - EC

Question 3 - D

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Question 3 - D - Answer - EC

Question 4 - MaximumMarks - 10

Question 4 - Image

Question 4 - A

Question 4 - A - Answer

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Question 4 - B

Question 4 - B - Answer

Question 4 - B - Answer - EC

Question 4 - C - i

Question 4 - C - i - Answer

Question 4 - C - i - Answer - EC

Question 4 - C - ii

Question 4 - C - ii - Answer

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Question 4 - D

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Question 5 - MaximumMarks - 10

Question 5 - A

Question 5 - A - Answer

Question 5 - A - Answer - EC

Question 5 - B

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Question 5 - C

Question 5 - C - Answer

Question 5 - C - Answer - EC

Question 5 - D

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IB BUSINESS MANAGEMENT HL, Paper 2, May, 2021, TZ0, Solved Past Paper