mock questions

Question 1

reasons to create a business plan

Answer 1

reduce potential future risks

show the bank the business has considered income and costs- more likely to get a loan in future

Question 2

economic influence on customer spending

Answer 2

how much the customer earns - employment

Question 3

reasons for conducting market research

Answer 3

identify the target market to develop products that fit customer needs

Question 4

public relations activities (PR)

Answer 4

advertising- social media, news articles

Question 5

examples of fixed costs

Answer 5

salary
rent
property taxes

Question 6

Explain one reason why Skate4U Ltd should calculate the number of scooters needed to
break even.

Answer 6

Calculating break-even will allow Skate4U to identify how many scooters will need to be sold to cover
costs and make a profit. Skate4U is currently able to produce 10 000 scooters and by calculating
break-even it can identify whether it can generate enough sales revenue from the 10 000 scooters to
cover the costs of production and how much profit it could make.

Question 7

one advantage of a strong brand image for a business.

Answer 7

Brand image makes products recognisable (1). This is important in a competitive market where products
are similar (1).

Question 8

formula for average rate of return

Answer 8

= Average return per annum/initial investment × 100