CIE IGCSE Topical Past Paper 1

4.1 Production of goods and services

0450/13/O/N/2024

BPT manufactures bicycles in country A. It uses batch production. The Operations Director is preparing a break-even chart for one of BPT’s bicycles, as shown in Fig. 1.1. The directors are considering ways to lower BPT’s break-even level of output. BPT imports 60% of its raw materials and exports its bicycles to 8 countries. The Managing Director wants to know how a depreciation in country A’s exchange rate and the introduction of import tariffs might affect BPT.

((e) Do you think batch production is the best method of production for a business to use? Justify your answer.[6]

0450/11/M/J/2022

CTF is a public limited company. It manufactures beds using batch production. The Operations Director is using break-even analysis to calculate the margin of safety for children’s beds. An extract from CTF’s output data is shown in Table 2.1. The Operations Director wants to know how an increase in inflation might affect CTF. She knows there are many environmental pressures that a manufacturing business could respond to.

Table 2.1 Extract from CTF’s output data (children’s beds per month)
Break-even output	14 000
Current level of output	18 000
Maximum factory output	25 000

(b) Calculate the margin of safety for CTF’s children’s beds. Show your working. [2]

0450/12/O/N/2024

SNT is an ethical business. It manufactures a range of soft drinks using batch production. In 2023 SNT produced 300 000 bottles of soft drinks each week. There are many factors which affect how much inventory the business should hold. SNT’s directors are planning to expand the business into new markets in other countries by forming a joint venture. They are considering licensing as another way to help overcome the potential problems of entering these new markets.

(b) Identify two factors which might affect how much inventory a business should hold. [2]
Factor 1:
Factor 2:

(c) Outline two benefits to SNT of using batch production.
Benefit 1:
Benefit 2:

0450/11/O/N/2024

RSL manufactures paint using flow production. Last year it produced 10 million litres of paint. RSL has 6 managers and 80 employees working in its factory. The managers use different leadership styles. RSL uses email and telephone calls as its methods of internal communication. The Operations Manager wants to understand why some manufacturing businesses are relocating their operations to other countries.

(a) Identify two benefits to a business of using flow production. [2]
Benefit 1:
Benefit 2:

0450/12/M/J/2024

FBM is a boat building business. It has 100 skilled employees. The Operations Director is concerned that FBM holds a high level of inventory. She is also concerned that the business is starting to experience diseconomies of scale. The Finance Director has been asked to analyse FBM’s cost and output data. An extract is shown in Table 1.1.

Extract from FBM’s cost and output data
Variable costs per unit	$5000
Fixed costs per year	$600 000
Number of boats made each year	300

Table 1.1

(d) Explain one advantage and one disadvantage to FBM of holding a high level of inventory. [6]
Advantage:
Explanation:

Disadvantage:
Explanation:

0450/12/F/M/2023

HCB manufactures cars in country X. It has 200 employees working in its factory. The business has changed its method of production due to new technology. HCB’s Managing Director is considering ways to become more ethical. She is aware that other businesses in country X have started to import cars. The interest rate in country X has increased due to rising inflation.

(b) Identify two ways technology could change production methods. [2]
Way 1:
Way 2:

0450/12/F/M/2024

WFH produces hats and sells them to a mass market. It holds a high level of inventory. The Managing Director is concerned about the liquidity of the business and has been analysing WFH’s financial statements. An extract is shown in Table 2.1. The Managing Director thinks that the business might fail. Other stakeholder groups might also be interested in WFH’s financial statements.

Extract from WFH’s financial statements ($000)
	2021	2022
Current assets	60	50
Inventory	20	30
Trade receivables	25	10
Cash	15	10
Current liabilities	20	40
Profit / loss	15	(10)

Table 2.1

0450/12/M/J/2023

KCL manufactures paper which is used in the production of newspapers and books. KCL holds a high level of inventory and buys all its raw materials, including wood, from local suppliers. Quality control is important. The Operations Director is considering ways to increase efficiency in the factory. Pressure groups are trying to influence KCL’s decisions to ensure that the business does not create more external costs than external benefits.

(c) State four benefits to a business of increasing efficiency. [4]
Benefit 1:
Benefit 2:
Benefit 3:
Benefit 4:

(e) Explain two factors a manufacturing business should consider when deciding how much inventory to hold. Which factor is likely to be the most important? Justify your answer. [6]

0450/11/M/J/2022

Table 2.1 Extract from CTF’s output data (children’s beds per month)
Break-even output	14 000
Current level of output	18 000
Maximum factory output	25 000

(d) Explain two possible advantages to CTF of using batch production. [6]
Advantage 1:
Explanation:

Advantage 2:
Explanation: