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Table 2 contains information about Mind Candy’s performance in 2013 - Edexcel - GCSE Business - Question 5 - 2019 - Paper 1
Question 5
Table 2 contains information about Mind Candy’s performance in 2013. Sales revenue: £30 560 692 Gross profit: £22 190 385 Other operating expenses and interest: £25... show full transcript
Worked Solution & Example Answer:Table 2 contains information about Mind Candy’s performance in 2013 - Edexcel - GCSE Business - Question 5 - 2019 - Paper 1
Step 1
Using the information in Table 2, calculate Mind Candy’s cost of sales.
Answer
To find Mind Candy’s cost of sales, we can use the formula:
Cost of Sales = Sales Revenue - Gross Profit.
Plugging in the values from the table:
Cost of Sales = £30,560,692 - £22,190,385 = £8,370,307.
Therefore, Mind Candy's cost of sales is £8,370,307.
Step 2
Using the information in Table 2, calculate, to 2 decimal places, Mind Candy’s gross profit margin.
Answer
To calculate the gross profit margin, we use the formula:
Gross Profit Margin = (Gross Profit / Sales Revenue) × 100.
Substituting the values: Gross Profit Margin = (£22,190,385 / £30,560,692) × 100 ≈ 72.51%.
Thus, Mind Candy’s gross profit margin is approximately 72.51%.
Step 3
Analyse the impact on Mind Candy of changing its main business objective to survival.
Answer
Changing the main business objective to survival can significantly impact Mind Candy in several ways:
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Short-Term Focus: The shift to survival means that Mind Candy may prioritize immediate financial health over long-term growth strategies. This might involve cost-cutting measures or restructuring to ensure that the business can continue to operate.
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Reduced Innovation: With a focus on survival, the company may reduce investment in new projects or innovations, possibly leading to stagnation in product development.
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Staff Morale: Changing objectives can impact staff morale, especially if it results in layoffs or changes to company culture. Employees may feel uncertain about their job security, which can affect productivity.
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Market Perception: This decision could alter how investors and customers perceive Mind Candy. A focus on survival could suggest instability, potentially affecting consumer confidence and sales.
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Strategic Realignment: The focus may shift towards maximizing cash flow and maintaining existing operations, which could redirect resources away from expansion and new markets.
Overall, while changing the objective to survival is crucial in tough times, it also presents challenges that could limit Mind Candy’s future growth opportunities.