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CTF Is A Public Limited Company

CTF is a public limited company that manufactures children's beds using batch production. The Operations Director is using break-even analysis to calculate the margin of safety for children's beds, which is 4,000 units. She wants to know how an increase in inflation might affect CTF and knows there are environmental pressures the company could respond to.

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Ziyaan Arif
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24 views3 pages

CTF Is A Public Limited Company

CTF is a public limited company that manufactures children's beds using batch production. The Operations Director is using break-even analysis to calculate the margin of safety for children's beds, which is 4,000 units. She wants to know how an increase in inflation might affect CTF and knows there are environmental pressures the company could respond to.

Uploaded by

Ziyaan Arif
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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CTF is a public limited company. It manufactures beds using batch production.

The Operations Director is using break-


even analysis to calculate the margin of safety for children’s beds. An extract 2 from CTF’s output data is shown in Table
2.1. The Operations Director wants to know how an increase in inflation might affect CTF. She knows there are many
environmental pressures that a manufacturing business could respond to.

(a) Define ‘public limited company.

It is a company that sells its shares to the public market and has limited liabilities. [2]

(b) Calculate the margin of safety for CTF’s children’s beds. Show your working.

Current level of output - Break even output = Margin Of Safety

18000-14000=4000

[2]

(c) Outline two ways of training to help abc

Way 1:Reduces Mistakes

Explanation: CTF’s manufacturers will make less mistakes with training. This will reduce loss of raw materials which will
result in less costs.

Way 2: Increases productivity

Explanation: .Ctf’s manufacturers will be able to produce more beds which will help ctf have stock available. This will help
increase sales as consumers can buy beds in bulk.

(d) Explain two possible advantages to CTF of using batch production.

Advantage 1: Sales in Bulk

Explanation: Ctf can produce many beds in low time which can allow consumers to buy beds in bulk. This will result jn
more profit for ctf.This will also help build customer loyalty

Advantage 2: Variety products can be produced

Explanation: Ctf can manufacture many different beds to ensure customer satisfaction. This may lead to more sales which
results in more profit.

[6]

(e) Do you think an organisation should always use external recruitment when recruiting skilled employees? Justify your
answer.
[6]

VCG manufactures high-quality briefcases and travel bags. VCG has 50 skilled production workers in its factory. VCG is
planning to expand by building a second factory. Different locations are being 3 considered. The Managing Director is
reviewing VCG’s financial statements. An extract is shown in Table 3.1. Both internal and external stakeholder groups of
VCG are interested in this information.

a. Define ‘shareholders’ equity’.

It is money invested into a business by its shareholders. [2]

a. Identify two financial statements a public limited company is legally required to publish each year.

Financial statement 1: Income statement

Financial statement 2: Statement of financial position[ 2]

a. State whether each of the following are classified as a current asset or a current liability.

Overdraft: Current liabilities

Trade receivables: Current assets..

Trade payables: Current liabilities


Cash in bank: Current assets [4]

a. Explain one way each of the following stakeholder groups might use VCG’s accounts:

Shareholders: They can calculate how much profit VCG makes

Explanation: Shareholders can use VCG’s Income statement to see if they make profit. This will help the shareholders to
know if the business is profitable.

Suppliers: To see how much debts VCG has

Explanation: Suppliers can check VCG’s financial statement of position to see if VCG can pay them in a reasonable amount
of time. This will build trust between VCG and their suppliers[6]

a. Do you think the type of business is the most important factor for a new business, when deciding on the most
suitable source of capital.

The type of business can be considered for instance in the case of a sole trader, they will have to see if they will have
security incase they fail to pay back a loan.

However, the amount of money to be borrowed and interest rates should also be considered to see if the new business
will be able to pay back the borrowed money .

To a large extent, considering the time or period of paying back the money would be the best so as to avoid mishaps of
ending up losing the owner’s personal assets when they fail to pay back.

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