TEST CODE 02133020

FORM TP 2013227 MAY/JUNE 2013

CARIBBEAN E XAM I NAT I O N S COUNCIL

CARIBBEAN ADVANCED PROFICIENCY EXAMINATION®

MANAGEMENT OF BUSINESS

UNIT 1 – Paper 02

2 hours 30 minutes

15 MAY 2013 (p.m.)

READ THE FOLLOWING INSTRUCTIONS CAREFULLY.

1. This paper consists of THREE sections.

2. Each section consists of TWO questions.

3. Candidates MUST answer ONE question from EACH section.

4. Begin EACH question on a separate page.

5. Each question is worth 25 marks.

DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO.

Copyright © 2011 Caribbean Examinations Council

All rights reserved.
02133020/CAPE 2013
 - 2 -

SECTION A

MODULE 1: BUSINESS AND ITS ENVIRONMENT

Answer ONE question from this section.

1. Miss Cookwell is contemplating converting her mobile canteen into a full fast-food restaurant.
She is uncertain as to whether to maintain the sole proprietorship or go into a partnership with
her two friends – Sally, a chartered accountant and Debbie, a qualified chef.

(a) Outline THREE essential provisions that the partners could include in their partnership
deed. [9 marks]

(b) Discuss TWO advantages and TWO disadvantages Miss Cookwell may experience if
she converts her business from a sole proprietorship to a partnership with her friends.
[16 marks]

Total 25 marks

2. XYZ Co Ltd, a firm specializing in the manufacturing of chemicals, has reviewed its mission
statement to include corporate social responsibility as part of the company’s new mission.

(a) Define the term ‘mission statement’ and state THREE reasons why it is important for
XYZ Co Ltd to have a mission statement. [8 marks]

(b) (i) Define the term ‘social responsibility’ as it relates to businesses. [2 marks]

(ii) Outline THREE ways in which XYZ Co Ltd can demonstrate social responsibility.
[6 marks]

(iii) Explain THREE reasons why it is important for XYZ Co Ltd to include social
responsibility in its mission statement. [9 marks]

Total 25 marks

GO ON TO THE NEXT PAGE

02133020/CAPE 2013
 - 3 -

SECTION B

MODULE 2: MANAGEMENT OF PEOPLE

Answer ONE question from this section.

3. Abraham Maslow developed the ‘Hierarchy of Needs’ Theory of Motivation.

(a) Identify FIVE main levels of Maslow’s Hierarchy of Needs and explain how EACH
level operates. [15 marks]

(b) Outline ONE action that managers can take to motivate workers at EACH level of the
hierarchy. [10 marks]

Total 25 marks

4. Kem-k company is located in a Caribbean island and is involved in the manufacturing of

hazardous chemicals. The CEO has decided to put together a team of three managers and other
staff to plan for the safety of the company in the event of a natural disaster in the country.

(a) Differentiate between a ‘team’ and a ‘group’. [3 marks]

(b) Outline the FIVE stages in the development of a group. [10 marks]

(c) Discuss THREE characteristics that the team selected must display in order to carry out
its task effectively. [12 marks]

Total 25 marks

GO ON TO THE NEXT PAGE

02133020/CAPE 2013
 - 4 -

SECTION C

MODULE 3: BUSINESS FINANCE AND ACCOUNTING

Answer ONE question from this section.

5. Sugarary Producers Ltd, a small business engaged in sugar cultivation, is experiencing cash
flow management problems.

(a) The table below shows the budgeted and actual results for Sugarary Producers’ overheads.

Sugarary Producers Ltd

Departments Budget (US $) Actual (US $) Variance (US $)

Production 300 000 240 000

Human Resources 120 000 140 000

Marketing 480 000 560 000

(i) Define the term ‘variance’. [2 marks]

(ii) Calculate the variances for EACH department at Sugarary Producers Ltd.
[3 marks]

(iii) State what EACH variance, calculated in (a) (ii) above, indicates about the
performance of the company. [3 marks]

(b) (i) Define the term ‘budget’. [2 marks]

(ii) State THREE reasons why it is important for Sugarary Producers to construct
a budget. [3 marks]

(c) Discuss THREE options that can be considered in order to improve the company’s
cash flow management. [12 marks]

Total 25 marks

GO ON TO THE NEXT PAGE

02133020/CAPE 2013
 - 5 -

6. The following are the financial statements of General Hardware Ltd for the year ended 30 June
2012.

Income Statement for the Year Ended 30 June 2012

$ $

Sales 48 000
Opening stock 10 800
Purchases 36 000
46 800
Closing stock 8 400
38 400
Gross profit 9 600
Expenses 1 600
Net profit 8 000

Balance Sheet as at 30 June 2012

$ $
Fixed Assets 32 000 Opening capital 32 000
Stock 8 400 Net profit 8 000
Debtors 12 000 40 000
Bank 6 600 Drawings 1 200
59 000 38 800
Loans 14 000
52 800
Creditors 3 200
Accrued expenses 3 000
59 000
(a) Compute, to one decimal place, the following ratios for the year ended 30 June 2012.
(i) Net Profit Margin
(ii) Acid Test Ratio
(iii) Current Ratio
(iv) Stock Turnover
(v) Long-term Debt to Equity [15 marks]
(b) Explain what EACH ratio demonstrates about the performance of General Hardware
Ltd. [10 marks]
Total 25 marks
END OF TEST
IF YOU FINISH BEFORE TIME IS CALLED, CHECK YOUR WORK ON THIS TEST.

02133020/CAPE 2013