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“Año del Buen Servicio al Ciudadano”

PAPER 01 - BUSINESS MANAGEMENT


(STANDARD LEVEL)

MARKSCHME

SECTION B

4.- The case study of the master in business administration of JACOB contains additional
information about MSS.

• The sales area determined to use BTL (Below the Line) promotion strategies to increase
its market share.

• The company determined to generate strategies of retention of personnel, based on


stimulating the intrinsic motivation in the administrative staff and teachers. In addition,
there is a proposal for training in ethics, social responsibility, coexistence and
occupational safety.

The case study includes some monthly financial data.

• The current number of students in MSS is 900.

• The monthly fee (price) per student is equal to $ 870

• The total fixed cost is $ 290,000

• The variable cost per unit is equal to 30% of the monthly quota.

a) Defines the term cost of sale

It is the sum of all the factors involved for the possession of a good and disposition for sale,
understood as the sum of investments and disbursements of money or use of resources.

Some of the methodologies for the calculation include:

Fixed Cost + Variable Cost

Direct cost + Indirect cost


Initial Inventory + Purchases - Final Inventory

Award a mark by a basic definition, but that makes mention of the sum of investments or
disbursements of money. At this point it is valid to give examples about costs of sale.

Award two marks for a correct definition.

b) With reference to the case MSS, explains two advantages of using a form of outsourcing in
human resources management.

Definition: It occurs when a company subcontracts production areas or the execution of a


process, to an external producer

Advantage:

• Focus on the core of the company

• Improves efficiency by employing specialized companies.

• Reduces indirect costs.

• Fixed costs (machinery) can be reduced.

Award 1 mark if an advantage is correctly mentioned, but no explanation is given.

Award 2 marks in case the explanation of an advantage is made with pertinence, clarity and
generating reasoned arguments.

Award 3 marks in case an advantage is explained correctly, clearly and presents reasoned
arguments. But the other advantage is only mentioned or not explained correctly.

Award 4 marks in case the explanation of two advantages is realized with pertinence, clarity
and generating reasoned arguments.

c) Using the above information, calculate for MSS.

(i) The break-even point in units (show all your working). [2]

Fixed Cost = $ 290,000


Unit variable cost = $ 870 x 0.3 = $ 261
Price = $ 870

BEQ = fixed costs / contribution per unit


BEQ= fixed costs / (price per unit – variable cost)

Break-even = $ 290,000 / ($ 870- $ 261) = 476.19 = $ 477


Give 1 point in case only shows the result and not the process.

Give 2 points if the whole mechanism and process is shown.

(ii) The margin of safety in units (show all your working). [2]
The current number of students in MSS is 900.

The break-even point in units equals 477 units

Margin of safety = current output - break-even point

= 900 - 477 = 423

Award 1 mark for showing the correct result.

Award 2 marks for showing the mechanism and the correct result.

(iii) The optimal number of students, in case they maintain an expected


profit of $ 400 000 per month. (show all your working). [2]

Target profit output = (total fixed cost + target profit) / (contribution per unit)

Optimal Amount = $ 290,000 + $ 400,000 / ($ 870- $ 261) = 1133

Award 1 mark for showing the correct result.

Award 2 marks for showing the mechanism and the correct result.

d) Draw a break-even graph accurately for the MSS company.


Award 1 point in case the student makes a chart, placing the axes of costs and income and
quantity.

Award 2 points for a correct location of the amounts of costs, revenues and quantities. In case
the student locates the lines but they are not labeled, this score will be assigned.

Award 3 points if a graph is presented with the axes and labeled lines. In addition to the
amounts correctly located. However, it did not identify the margin of safety and profitability.

Award 4 points for a chart with all the corresponding labels. In addition to locating the margin
of safety and profits.

e) Analyze the relationship between primary research conducted by MSS and the
establishment of advocacy strategies.

Market research refers to the process of collecting, analyzing and presenting data relating to a
particular market, including data on the consumption of goods and services and consumer
behavior. While primary research is also known as field research and involves the gathering of
first-hand information from the market. Among the most common techniques are surveys,
interviews, focus group and observation. Based on this research, the consumer profile and the
needs that are maintained are determined. In the same way, it is identified which type of
advertising is the most used or generates greater benefit. In the case mentioned that it is
suggested to optimize word of mouth marketing, this is because the interested parties spread
the good results obtained and enhance this act can attract better results. On the other hand,
from the results of the investigation it is determined if any changes in promotions are necessary.
For example, in the case we identified a sum of efforts on BTL promotion strategies to generate
higher income. These can be text ads, banners, telemarketing, email marketing, merchandising,
guerrilla marketing, among others. In conclusion, in order to know the best option or proposal
to use promotional strategy, it is necessary to investigate the market to know their interests and
generate benefits for them.

Award 2 points if a definition of variables is shown, but the relation is not established correctly
and with reasoned arguments.

Award 4 points in case a definition of variables is shown and the relation established is correct,
in addition it presents reasoned arguments.

Award 5 points in case the final idea shows a closing or conclusion with balanced arguments.

Award 6 points in case a very relevant and well justified relationship is shown. In addition to
the development of a conclusion and recommendation for MSS.