Business 2024 · May/June · Paper 22

x, y and z should be calculated from Table 1.1 and each variance identified as favourable or adverse.

Incremental budgeting is quick and easy to prepare because it starts with the previous budget and adjusts it for expected changes.

An assessment centre can give PS a more accurate view of a candidate’s skills because it tests them in realistic tasks, such as teamwork, problem-solving and communication, which are important for a Marketing Manager.

A disadvantage is that assessment centres are expensive and time-consuming to organise, so PS may face higher recruitment costs and delays in filling the vacancy.

Effective packaging can help PS attract customers by improving product appearance, creating brand identity and providing information or protection for the product. It may also influence buying decisions at the point of sale and help differentiate PS’s products from competitors. However, packaging can increase costs, and if the product is not of good quality, attractive packaging alone will not ensure sales. The importance of packaging depends on the target market, the type of product and the extent of competition. Overall, packaging is important, but its role is strongest when combined with a good product and effective marketing.

On-the-job training.

A mass market is a large market made up of many customers with similar needs and wants, so a product is aimed at a wide range of buyers.

Contribution per unit = total contribution ÷ output. Using the data, total contribution = $25,000 - $18,750 = $6,250. Output = 400 + 100 = 500 units. Contribution per unit = $6,250 ÷ 500 = $12.50 per unit.

Break-even analysis assumes costs and revenue are linear and that all output is sold, which may not be realistic for CS because demand for shoes can change and prices may vary.

One disadvantage is that CS could face production delays if the supplier fails to deliver leather on time, because JIT keeps very low inventory levels and there may be no buffer stock.

Another disadvantage is that CS may lose the ability to meet sudden increases in demand, since it would not hold much finished stock in the shop or much raw material in storage.

Being a small business can be important to CS because it may allow close contact with customers, flexibility in design, lower bureaucracy and the ability to specialise in niche markets. This could suit a business making unique shoes and offering repairs. However, being small can also limit access to finance, reduce economies of scale and make it harder to compete with low-priced mass producers. For CS, the importance of being small depends on whether it wants to remain niche and personalised or expand to compete more widely. Overall, being small is likely to be an advantage for CS if it focuses on custom-made shoes and customer service, but it may also restrict growth and profitability.