Business management · 2011 · Paper 2 · SL · Question paper

N11/3/BUSMT/SP2/ENG/TZ0/XX BUSINESS AND MANAGEMENT STANDARD LEVEL PAPER 2 Friday 18 November 2011 (morning) INSTRUCTIONS TO Ca Nd Ida TES  d o not open this examination paper until instructed to do so.  Section a: answer one question.  Section B: answer two questions. 1 hour 45 minutes 8811-5014 9 pages © International Baccalaureate Organization 2011 8 8 1 1 5 0 14 N11/3/BUSMT/SP2/ENG/TZ0/XX 8811-5014 – 2 – SECTION A Answer one question from this section. 1. Fang Kwong and XIAN Technology Fang Kwong lives in a village in the mountains of western China. A major problem for the residents of that region is that they must transport large amounts of firewood for their kitchen ovens. Fang was told of a solution by XIAN Technology, which created a new type of kitchen oven that burns straw and other farm waste products instead of firewood. Both XIAN Technology and the Chinese government wish to help small entrepreneurs* set up franchises to provide distribution channels for these new kitchen ovens. Fang is very keen to take advantage of this opportunity. She has identified a small local warehouse with sufficient storage space. In order to receive a US$10 000 small-business loan from the government at the start of September 2012, she must complete a cash-flow forecast. She has estimated the following figures for the first six months of operation, to begin in September 2012: (Assume one month is 30 days) Sales 20 kitchen ovens per month at US$50 for the first three months. From the fourth month Fang forecasts an increase in sales of two kitchen ovens each month. Monthly rent US$400 Monthly salary US$200 Monthly supplies (e.g. stationery) US$50 Monthly interest on government loan to set up business US$42 Overhead costs US$200, payable every other month, starting in October 2012. Fang’s purchases from XIAN Technology • First month purchase of 60 kitchen ovens at US$25 each and payable at the end of the second month. • From the second month purchase of 20 kitchen ovens per month, at US$25 each and payable at the end of the following month. Fang will need to purchase a lorry to deliver the XIAN Technology kitchen ovens to customers who live in