Describe one feature of a cooperative.

Using total contribution, calculate the forecasted total profit for SSL before the introduction of the new promotional strategy (show all your working).

Construct a fully labelled break-even chart for SSL for before the new promotional strategy is introduced (show all your working).

Explain one advantage to SSL from implementing the new promotional strategy.

One feature of a cooperative:

• decision making is usually shared by all members
• any profits (or surpluses) and losses arising from this decision are also shared 
• decision making is regarded as more democratic
• membership is voluntary 
• although a for-profit business there is usually some sort of social improvement goal.

Award [1] for a partial description of a cooperative.

Award [2] for a fuller description which may include an element of profit (surplus) or loss sharing.

Unit contribution is $10.20 − $6.40 = $3.80

Total contribution = 3200 × $3.80 = $12 160

Total profit = $12 160 − $7980 = $4180

Award [1] for a correct calculation for both total contribution and one mark for total profit similar to the working shown above.

If the candidate correctly calculates total profit but does not make any reference to contribution, then award [1] only.

If candidate incorrectly calculates contribution but applies correctly to Total Profit then OFR and 1 mark.

Do not penalize lack of $ sign.

Award [1] for correct labelling of both x and y axis − total costs and revenue (y) and output or units produced (x).

Award [1] for accurate total cost curve.

Award [1] for accurate total revenue curve.

Award [1] for identifying the break-even point = Do Not reward calculations of BE quantity when not accompanied by chart.

Candidates are NOT required to produce Fixed Costs FC or show the B/E Revenue line.

Accuracy of TC and TR is based on the ability to approximate the B/E quantity based on the scale chosen for the x and y axes (this allows for the cases where graph paper has not been used).

If B/E not accurate but identified DO NOT penalize if either TR and/or TC already penalized. Hence OFR applied.

The new promotional strategy will allow SSL to generate considerable goodwill, publicity and social responsibility. This will boost output from the current level of 3200 to the maximum of 4000. SSL may be able to reduce costs through greater bulk buying of ingredients and this could lead to an increase in profits.

As SSL has a minimum order size of 50, the promotional offer is likely to encourage more schools to order.

Award [1] for an advantage and an additional [1] for clear application to SSL.

Candidates demonstrated a poor understanding of cooperatives. Many candidates commented that it was a form of cooperation between two businesses. Others provided definitions rather than features. Many responses described features that could equally apply to other types of business entities, such as partnerships.

This was a two-part question as the first three words “Using total contribution” meant that this amount needed to be calculated first. In many cases candidates didn’t calculate total contribution but went on to give the correct forecasted total profit.

The quality of the charts constructed continues to be disappointing. Some of the continuing mistakes are:

• axes improperly labelled and need to include costs and revenues
• break-even point not labelled, even though a line was sometimes drawn from the Total revenue /Total costs intersection to the x-axis
• many graphs do not have any discernible scale. Without this there is no way to determine the accuracy of Total revenue and Total costs
• too many candidates continue not to use graph paper which further undermines the accuracy of the chart.

Overall, candidates poorly understood this question and few demonstrated understanding of the the financial aspects of the data provided.