Cambridge Assessment International Education
Cambridge International Advanced Subsidiary and Advanced Level
BUSINESS 9609/21
Paper 2 Data Response October/November 2019
1 hour 30 minutes
No Additional Materials are required.
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READ THESE INSTRUCTIONS FIRST
An answer booklet is provided inside this question paper. You should follow the instructions on the front cover
of the answer booklet. If you need additional answer paper ask the invigilator for a continuation booklet.
Answer all questions.
The businesses described in this paper are entirely fictitious.
The number of marks is given in brackets [ ] at the end of each question or part question.
This document consists of 3 printed pages, 1 blank page and 1 Insert.
DC (LK) 169862/1
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2
1 Cracking Eggs (CE)
Lian is a chicken farmer. Her farm is located on the edge of a busy town. The main output from
her farm is eggs. The eggs are transported by truck to customers. The eggs are sold through
various channels of distribution.
CE has an excellent reputation for fresh, high quality eggs. It offers a ‘money back’ guarantee
if the consumer is not happy with the quality of the eggs. All the eggs are labelled with a ‘best 5
before’ date which gives the consumer an idea of how long each egg will remain fresh.
Lian has two production lines at the farm; one for the industrial market and one for the consumer
market. Table 1.1 contains some data about the two production lines.
Table 1.1: Production line data
Production Line A Production Line B 10
Type of market Industrial Consumer
Number of 4 6
employees
Sorting process None Eggs sorted into
small, medium 15
and large
Packaging Trays of 100 eggs Boxes with 6 of the
same size egg
in each box
Total variable costs $2.70 per tray $0.45 per box 20
Price $4.00 per tray $0.90 per box
The fixed costs for the business are $10 000 per month. These are allocated equally between
the two production lines.
Lian would like to expand CE by keeping more chickens and opening a new production line.
The new production line would require five employees who would need to be recruited and 25
trained. It would specialise in sorting and packaging eggs that will be sold to retailers.
(a) (i) Define the term ‘fixed costs’ (line 22). [2]
(ii) Explain the term ‘channels of distribution’ (line 3). [3]
(b) (i) Calculate the profit CE will make from production line B if it sorts, packages and sells
150 000 eggs in a month. [4]
(ii) Explain one problem of CE’s allocation of fixed costs. [2]
(c) Analyse two ways in which CE adds value to its products. [8]
(d) Evaluate the likely impact on the stakeholders of CE of the planned expansion. [11]
© UCLES 2019 9609/21/O/N/19
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2 Fantastic Flowers (FF)
FF is a private limited company which sells flower arrangements for special occasions such
as birthdays and anniversaries. This is a very competitive market. The business sells all of its
products online. Customers use the FF website to choose the flowers they like and how they
want them arranged.
Once a customer has placed an order, a skilled employee will use job production to produce the 5
flower arrangement. Employees are paid a commission based on the final selling price of the
arrangements which they produce. The finished product is then delivered to any address within
50 kilometres of the FF premises. Most customers receive their order within 24 hours of placing
it, apart from during busy times of the year.
The directors of FF are concerned that the current product has reached maturity in the product 10
life cycle. A suggestion has been made to produce low-price flower arrangements. There would
be 10 different arrangements which would be made using batch production. These flower
arrangements would be sold through local retailers.
The Finance Director has suggested that the new venture may decrease FF’s working capital,
which is currently $18 000. She has provided information from the statement of financial position 15
(see Table 2.1).
Table 2.1: Information from FF’s statement of financial position
$000
Inventory 11
Trade receivables 20 20
Overdraft 5
Trade payables X
Half of the current workforce would be used to make the low-price flower arrangements. These
employees would be paid using a time based payment method. The Human Resource Director
has suggested that this may lead to poor employee motivation. 25
(a) (i) Define the term ‘overdraft’ (line 21). [2]
(ii) Explain the term ‘maturity in the product life cycle’ (lines 10–11). [3]
(b) (i) Refer to Table 2.1 and any other relevant information. Calculate the value of X. [2]
(ii) Explain two possible disadvantages to FF of decreasing working capital. [4]
(c) Analyse one advantage and one disadvantage to FF of using job production for its flower
arrangements. [8]
(d) Recommend non-financial motivators which FF could put in place to motivate the employees
who make the low-price flower arrangements. Justify your recommendation. [11]
© UCLES 2019 9609/21/O/N/19
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© UCLES 2019 9609/21/O/N/19
