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.
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.
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.
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, May, 2018, TZ0, Solved Past Paper
Master the 2018 IB May for Paper 2 Business Management HL with examiner tailored solutions and comments for TZ0
Question 1 [Explained]
Visionary Toys (VT) is a company that specializes in creating innovative toys using 3D printing technology. Since its inception in January 2017, VT has been leveraging its unique selling proposition (USP) to differentiate itself in the competitive toy market. The company employs the reducing balance method of depreciation, which is particularly relevant given the rapid advancements in 3D printing technology. This method allows VT to more accurately reflect the depreciation of its assets, aligning with its financial strategy to optimize tax liabilities. At the end of 2017, VT's financial director presented key financial data, including cash, net fixed assets, and liabilities, to assess the company's financial health and plan for future growth.
Question 1 [a] [Explanation]
This question asks you to define the term unique selling point/proposition (USP). A USP is a distinct feature or characteristic of an organization, product, or brand that sets it apart from its competitors in the minds of consumers. It highlights what makes a product or service unique and why customers should choose it over others. The USP is crucial for differentiating a business in a crowded market, helping to attract and retain customers by offering something that competitors do not.
Question 1 [b] [i] [Explanation]
This question requires you to construct a fully labeled balance sheet for Visionary Toys (VT) at the end of 2017. A balance sheet is a financial statement that provides a snapshot of a company's financial position at a specific point in time. It includes assets, liabilities, and equity, showing how the company's resources are financed through debt and shareholders' equity. The balance sheet must be accurately constructed with all relevant headings, subheadings, and figures to reflect VT's financial status at the end of the year.
Question 1 [b] [ii] [Explanation]
This question asks you to calculate the acid test (quick) ratio for Visionary Toys (VT) for 2018. The acid test ratio is a financial metric that measures a company's ability to meet its short-term liabilities with its most liquid assets, excluding inventory. It is calculated by subtracting inventory from current assets and dividing the result by current liabilities. This ratio provides insight into a company's short-term financial health and its capacity to cover immediate obligations without relying on the sale of inventory.
Question 1 [c] [Explanation]
This question requires you to explain one reason why Visionary Toys (VT) might use the reducing balance method of depreciation. Depreciation is the allocation of the cost of an asset over its useful life, and the reducing balance method applies a constant percentage rate of depreciation to the diminishing book value of the asset each year. This method results in higher depreciation charges in the early years of an asset's life and lower charges in later years. It is often used for assets that lose value quickly or become obsolete due to technological advancements.
Question 2 [Explained]
Jill Anderson operates a restaurant where she is considering replacing her existing meals with gluten-free meals due to slowing sales. The financial and forecast information provided for May 2018 will help determine the best course of action. Jill's restaurant can only produce either existing meals or gluten-free meals, not both.
The details include the average price of existing meals, rent, variable costs, sales figures, and Jill's salary. For gluten-free meals, the estimated price, variable costs, sales forecast, and additional fixed costs for new machinery are given. Additionally, a local gluten-free manufacturer offers to supply prepared gluten-free meals at a specific price, leaving Jill to decide whether to make or buy these meals.
Question 2 [a] [Explanation]
The term supply chain refers to the entire system involved in the production and delivery of a product or service, from the acquisition of raw materials to the final delivery to the consumer. It encompasses all stages of production, including sourcing, manufacturing, and distribution.