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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.

01 Hours 45 Minutes

50 Marks

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IB BUSINESS MANAGEMENT SL, Paper 2, November, 2019, TZ0, Solved Past Paper

Master the 2019 IB November for Paper 2 Business Management SL with examiner tailored solutions and comments for TZ0

Question 1 [Explained]

Scale Airplane Modeller is a magazine produced by Small-Scale Hobbies (SSH). The company sells the magazine through independent retail outlets in the US. The finance director produced a summary of 2018's financial information. Last year's break-even chart showed that SSH had a margin of safety of 20,000 units.

The following table provides selected financial data for SSH for 2018:

Annual fixed costs	Variable costs per magazine produced	Magazine price
$100,000	$2	$4.50

Question 1 [a] [Explanation]

This question asks you to define the term margin of safety.

Question 1 [b] [Explanation]

Using the financial data in Table 1, calculate:

Question 1 [b] [i] [Explanation]

the break-even level of output (show all your working);

Question 1 [b] [ii] [Explanation]

the percentage of total costs that were fixed costs for last year (show all your working);

Question 1 [b] [iii] [Explanation]

the level of profit for SSH at 2018's level of production (show all your working).

Question 1 [c] [Explanation]

Explain how the introduction of new production methods will affect the total cost line in SSH's break-even chart.