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These are explanations and solutions for IB past papers, not the official version. For official papers, you can go to IB Follet or access them through your school.

02 Hours 15 Minutes

70 Marks

Calculator is allowed

IB BUSINESS MANAGEMENT HL, Paper 2, November, 2018, TZ0, Solved Past Paper

Master the 2018 IB November for Paper 2 Business Management HL with examiner tailored solutions and comments for TZ0

Question 1 [Explained]

Designer Dolls (DD) is a start-up business that will create hand-crafted unique dolls using a job/customized production method. As part of their business plan, DD undertook a break-even analysis. The following table summarizes the fixed costs, variable costs per doll, price per doll, and full productive capacity:

Fixed costs	$10,000
Variable costs per doll	$30
Price per doll	$50
Full productive capacity	900 dolls

Question 1 [a] [Explanation]

This question asks you to describe one limitation of a break-even analysis.

Question 1 [b] [i] [Explanation]

This question asks you to calculate the number of dolls that DD needs to sell to achieve a profit of $4000, showing all your working.

Question 1 [b] [ii] [Explanation]

This question asks you to calculate the capacity utilization rate at the break-even quantity for DD for the first year of operation, showing all your working.

Question 1 [b] [iii] [Explanation]

This question asks you to calculate the profit or loss in the first year if DD sells 400 dolls, showing all your working.

Question 1 [c] [Explanation]

This question asks you to calculate the price per doll that DD would need to charge to make a $6500 profit, assuming that the quantity of dolls to be sold in the second year is 550 and costs remain unchanged.

Question 2 [Explained]

Papel manufactures and sells paper bags. It pays cash for 80% of its raw materials but, to remain competitive, it must sell on credit to all customers. Many debtors are not paying on time and creditors (suppliers) are increasing. The board of directors is concerned about Papel's liquidity position.

	000s $
Accumulated retained profit	14
Cash	3
Cost of goods sold	2
Creditors	20
Debtors	12
Expenses	2
Long-term liabilities (debt)	20
Net fixed assets	60
Sales revenue	5
Share capital	26
Stock	5

Question 2 [a] [Explanation]

This question asks you to define the term debtors.