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.
01 Hours 45 Minutes
100 Marks
Calculator NOT allowed
IB BUSINESS MANAGEMENT SL, Paper 2, May, 2011, TZ0, Solved Past Paper
Master the 2011 IB May for Paper 2 Business Management SL with examiner tailored solutions and comments for TZ0
Question 1 [Explained]
Informatic, a computer manufacturing company based in Sri Lanka, employs batch production to manufacture computers according to customer specifications. This method involves producing items in groups or batches, where each batch goes through the production process together. The company pays its production workers hourly wages, which are lower than the average wage in Sri Lanka, but compensates them with long-term job security and other non-financial rewards. Informatic exports 4000 computers annually to Pakistan, primarily using local independent distributors who are familiar with the local market and have experience in delivering and installing computers. This distribution method accounts for 90% of Informatic's sales. However, using local distributors increases the final price for customers. To address this, Informatic's senior managers have decided to offer customers in Pakistan the option to purchase computers directly from the company by phone, as e-commerce sales are not available. The company's financial figures include fixed costs of $100,000 per year, variable costs that are 80% of the sales price, and a sales price of $1000 per computer.
Question 1 [a] [i] [Explanation]
This question asks you to define the term batch production. Batch production is a manufacturing process where items are produced in groups or batches. Each batch undergoes a stage of the production process together, and once completed, the entire batch moves to the next stage. This method is often used when producing items that are similar but not identical, allowing for customization according to customer specifications.
Question 1 [a] [ii] [Explanation]
This question requires you to identify two fixed costs for Informatic. Fixed costs are expenses that do not change with the level of production or sales. They remain constant regardless of the number of units produced.
Question 1 [b] [i] [Explanation]
This question asks you to calculate the break-even quantity in units. The break-even point is the level of output at which total revenue equals total costs, resulting in neither profit nor loss. To find this, you need to determine the contribution per unit and divide the fixed costs by this contribution.
Question 1 [b] [ii] [Explanation]
This question asks you to calculate the margin of safety in units. The margin of safety represents the difference between the actual level of output and the break-even level of output. It indicates how much sales can drop before the business reaches its break-even point.
Question 1 [b] [iii] [Explanation]
This question asks you to calculate the net profit if 4000 computers are sold. Net profit is the amount of money left after all expenses, including fixed and variable costs, have been deducted from total revenue.
Question 1 [b] [iv] [Explanation]
This question asks you to prepare a fully labelled break-even chart. A break-even chart visually represents the relationship between costs, revenue, and output levels, highlighting the break-even point where total revenue equals total costs.