Cambridge International AS & A Level

BUSINESS 9609/22
Paper 2 Data Response February/March 2022

1 hour 30 minutes

You must answer on the enclosed answer booklet.

* 8 5 0 9 8 1 0 8 5 1 *

You will need: Answer booklet (enclosed)

INSTRUCTIONS
● Answer all questions.
● Follow the instructions on the front cover of the answer booklet. If you need additional answer paper,
ask the invigilator for a continuation booklet.

INFORMATION
● The total mark for this paper is 60.
● The number of marks for each question or part question is shown in brackets [ ].

This document has 4 pages. Any blank pages are indicated.

DC (CJ) 304367/2
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1 Rehana Recycles (RR)

Rehana is very environmentally aware. One year ago, Rehana identified a business opportunity to
reuse waste products and set up Rehana Recycles (RR) as a sole trader.

A local company sells bottled drinks and reuses the empty glass bottles that are returned by
customers. It cannot reuse any damaged bottles, so they are dumped as waste. Rehana asked
this company if she could have the damaged glass bottles. The company agreed she could have 5
them at no cost.

RR melts down the glass and makes unique vases and other glassware products. RR’s mission
statement is ‘Make waste beautiful’. Rehana markets her products as ‘Lovely for the planet, lovely
for you’. The business has a strong local brand image. Rehana has recently invested in marketing
which focuses on her unique selling point of recycling waste. 10

To help satisfy demand, Rehana recently employed two local artists who are also very
environmentally aware. They are skilled in making handmade glass jewellery. RR currently makes
handmade products using job production. Rehana has a democratic leadership style.

Rehana has produced some financial data shown in Table 1.1.

Table 1.1 Financial data 15

$ $
Current assets Current liabilities
Cash 2 000 Trade payables 3 000
Inventory 12 000 Overdraft 5 000
Total current assets 14 000 Total current liabilities 8 000 20

As demand has grown, Rehana needs to increase her output. Rehana has identified two ways of
increasing output. She could either:

• keep using job production and employ more artists to create unique glassware products
using the RR brand, or
• change to batch production and make a larger number of standardised glassware using
the RR brand.

(a) (i) Define the term ‘mission statement’ (line 7). [2]

(ii) Explain the term ‘democratic leadership style’ (line 13). [3]

(b) (i) Refer to Table 1.1. Calculate the acid test ratio for RR. [3]

(ii) Explain one method Rehana may use to improve liquidity. [3]

(c) Analyse two benefits for RR of having a unique selling point (USP). [8]

(d) Evaluate whether RR should change to batch production. [11]

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2 Benjamin’s Beds (BB)

Benjamin’s Beds (BB) is a large manufacturer of beds and has a strong brand image for quality.
Its main channel of distribution is through the producer market (B2B) to national hotel chains.
Recently, BB has also entered the consumer market (B2C) by selling online direct to customers.

BB uses flow production. BB’s existing machinery is old and cannot satisfy the increased demand.
The directors of BB have decided its existing machinery needs replacing. Table 2.1 shows data for 5
existing and proposed new machinery.

Table 2.1 Data for existing and proposed new machinery

Variable cost Output per

per unit year
($) 10
Existing machinery 50 5000
New machinery 40 7500

Fixed costs are $500 000 per year. Using new machinery would reduce this by 10%.

BB sales data suggests that its market share is growing rapidly. The consumer market (B2C) is
becoming more important to BB because online orders are increasing. However, online demand is 15
for a wide range of bed styles. The consumer market requires a substantial marketing budget and
some retraining of employees.

Orders from national hotel chains in the producer market (B2B) are for a more limited range of bed
styles. These orders remain constant with low marketing costs. However, BB is increasingly under
pressure to reduce prices to hotels. 20

BB uses non-financial motivators and until recently had a motivated workforce. Efficiency is falling
due to employees having to work longer hours because of increased demand. This is decreasing
staff morale and welfare.

(a) (i) Define the term ‘market share’ (line 14). [2]

(ii) Explain the term ‘efficiency’ (line 21). [3]

(b) (i) Refer to Table 2.1 and other information. Calculate BB’s total annual cost if it uses the
proposed new machinery. [3]

(ii) Explain one possible limitation to BB of using the proposed new machinery. [3]

(c) Analyse two possible disadvantages to BB of decreased staff morale and welfare. [8]

(d) Recommend whether BB should focus on the producer market (B2B) or the consumer market
(B2C). Justify your recommendation. [11]

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