IB BUSINESS MANAGEMENT SL, Paper 2, November, 2017, TZ0, Solved Past Paper

Pelican Pies (PP) produces high-quality pies that have limited brand loyalty outside of their local market. The prices of the pies are higher than those of PP's competitors. For the year 2018, PP's owner, Austin, is looking to increase sales beyond the local market by lowering prices and spending a greater proportion of PP's promotional budget on above-the-line methods such as regional newspaper advertisements. To finance this type of promotion, Austin will have to increase his loan amount by $10,000.

Moverse operates in the health and fitness sector, offering a unique service where instructors travel to the buildings of large companies to conduct fitness classes. Unlike traditional gyms, Moverse does not have its own equipment or fitness instructors on-site. Instead, all instructors work part-time and are compensated based on the time they spend working, known as the time rate method. Moverse currently serves several large companies, with a total of 727 employees enrolled in its program. The company charges a yearly fee of $145 per employee, has fixed costs of $60,000 per year, and incurs a variable cost of $45 per employee.