CAIE A-Level Business 5.4.3 Uses of Cost Information

1(b)(i)

Explain one way PS could use cost information to improve business performance.

Indicative content - Responses may include:

AO1 Knowledge and understanding:

Knowledge of a use of cost information to improve business performance □ :

- Help make the investment decision / to obtain loans e.g from a bank.

- Identify unnecessary expense.

- Forecast profit.

- To set prices.

- To improve cash flow.

- other factors involved e.g. cost of investment, future market conditions, whether the product will be successful

No further marks can be gained without knowledge and understanding.

AO2 Application

Limited application ${ }^{\Delta \text { pp }}$, applies knowledge to PS once.

Developed application ${ }^{\Delta \neq \mathrm{F}}+{ }^{\Delta p \mathrm{~F}}$ applies knowledge to PS twice OR applies once to PS AND develops answer to explain how it can help improve business performance.

- The profit has increased from $\$ 8 \mathrm{~m}$ to $\$ 13 \mathrm{~m}$.

- Environmentally friendly.

- Added value.

- Expenses do not increase very much so can spread over higher number of units.

Accept all valid responses.

1(b)(ii)

Exemplar and annotations

To consider where costs can be reduced , $\kappa$, as PS move to becoming more capital intensive which will require capital investment

To determine the impact on profits K , if PS launch the new packaging, ${ }^{\alpha^{\mathrm{FP}}}$ profits forecast to increase by $\$ 5 \mathrm{~m}$ (62.5\% or OFR)

Mark

Rationale

3

A use explained in the specific context of PS by using the
information in the case study and develops answer to
explain why it is useful.

3

A financial use in this one and there is context from the
data in Table 1.1., also how the use given is linked to the
issue.

To determine if PS can launch the new packaging
□ as costs will impact the decision □ but the forecast revenue increase is greater than the cost increase ${ }^{\star \mathrm{FD}}$.

3

Although the ${ }^{\Delta F}$ appears first, it cannot be awarded until
the $\kappa$ has been found. However, there is obvious $\kappa$, so
you can go back and award the

To compare labour costs , b because PS use different payment methods □ .

2

Relevant use $\kappa$. The context linked to this is reasonable
□ , but is not developed.

To help improve cashflow □ as cost information includes fixed and variable costs □ NAQ

1

Knowledge of a use. The rest of the answer is not applying it to the context so □ NAQ (Not Answering Question).

To consider where costs can be reduced , ", to help improve cashflow □

1

Both are knowledge of a use but there is only 1 mark for knowledge □ .