| Date | November 2017 | Marks available | 2 | Reference code | 17N.2.SL.TZ0.2 |
| Level | Standard level | Paper | Paper 2 | Time zone | Time zone 0 |
| Command term | Calculate | Question number | 2 | Adapted from | N/A |
Question
Moverse
Moverse operates in the health and fitness sector. Moverse is not a traditional gym with machines (equipment) and fitness instructors (trainers). The instructors themselves travel and run fitness classes in the buildings of large companies. Instructors all work part-time and are paid wages on a time rate basis.
Moverse currently sells its services to several large companies. They have a total of 727 employees enrolled on its programme.
- Moverse charges a yearly fee of $145 for each employee participating.
- Moverse’s fixed costs are $60 000 per year.
- The variable cost per employee taking part in the programme is $45.
Describe the time rate method of paying wages.
Calculate the break-even quantity for Moverse (show all your working).
Construct a fully labelled break-even chart, to scale, for Moverse if 800 employees enroll on Moverse’s training programme.
Calculate the profit or loss if 800 employees enroll on Moverse’s training programme (show all your working).
Markscheme
Employees are remunerated based on the duration of time that they work.
Accept any other relevant description.
Award [1] for a vague description. Award [2] for a clear description similar to the answer above.
Break-even level of output
= 600 employees / units / members.
Award [1] for correct working and [1] for the correct answer. Award up to a maximum of [2]. Do not penalize candidates who omit the word “unit” from their answer.
Award marks as follows:
- [1] for both appropriately labelled axes – y-axis must include both costs and revenue. The x-axis can be any suggestion of quantity, including output
- [1] for accurately drawn and labelled total cost line.
- [1] for accurately drawn and labelled total revenue line.
- [1] for indication of break-even point. OFR applies from part (b)(i).
Award a maximum of [2] if the chart is not neat, not drawn with a straight edge, or is not to scale. If a candidate “free hands” their break-even chart, the maximum they can receive is [2]. For two marks, the break-even chart should be largely correct – axes correctly labelled. Total revenue and Total cost lines identified and largely correct. For example, Total revenue line should start at (0,0) and total cost line should start where the Fixed cost line intersects the y axis.
If a candidate produces a table rather than a chart, award [0].
Number of enrolled participants x contribution – fixed costs = profit
800 x 100 – 60 000 = $20 000
OR
Revenue (800 x 145) 116 000
Variable costs (800 x 45) 36 000
Fixed costs 60 000
Profit 20 000
Award [1] for correct working (any method is acceptable as long as working is shown) and [1] for the correct answer. Award up to a maximum of [2].
