Mark Scheme (Results)

January 2021

Pearson Edexcel International Advanced

Subsidiary
In Business (WBS12)
Unit 2: Managing Business Activities
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January 2021
Publications Code WBS12_01_2101_MS
All the material in this publication is copyright
© Pearson Education Ltd 2021
General Marking Guidance

• All candidates must receive the same

treatment. Examiners must mark the first candidate in
exactly the same way as they mark the last.
• Mark schemes should be applied positively. Candidates
must be rewarded for what they have shown they can do
rather than penalised for omissions.
• Examiners should mark according to the mark scheme not
according to their perception of where the grade
boundaries may lie.
• There is no ceiling on achievement. All marks on the mark
scheme should be used appropriately.
• All the marks on the mark scheme are designed to be
awarded. Examiners should always award full marks if
deserved, i.e. if the answer matches the mark
scheme. Examiners should also be prepared to award
zero marks if the candidate’s response is not worthy of
credit according to the mark scheme.
• Where some judgement is required, mark schemes will
provide the principles by which marks will be awarded and
exemplification may be limited.
• When examiners are in doubt regarding the application of
the mark scheme to a candidate’s response, the team
leader must be consulted.
• Crossed out work should be marked UNLESS the
candidate has replaced it with an alternative response.
Question Answer Mark
Number
1(a) Knowledge 2

Up to 2 marks for defining the term ‘statement of comprehensive

income’, e.g.

• A document to show income and expenditure of a business

(1) over a financial year (1)
(2)

Question Answer Mark

Number
1(b) Knowledge 1, Application 2, Analysis 1

Quantitative skills assessed:

QS5: Calculate cost, revenue, profit and break-even

Knowledge
1 mark for identifying a way, e.g.
• The break-even point may decrease (1)

Application
Up to 2 marks for contextualised answers, e.g.
• At the higher variable cost, contribution was
£1.00 - £0.27 = £0.73 (1)
• At the new variable cost of £0.26, a vegan roll contributes
£0.74 (1)

Analysis
1 mark for developing the impact, e.g.
• As each vegan roll contributes a high proportion of the
selling price towards paying off the fixed costs, a lower
quantity of sales will be needed in order to break-even (1)
(4)
Question Answer Mark
Number
1(c) Knowledge 2, Application 2, Analysis 2

Quantitative skills assessed:

QS3: Construct and interpret a range of standard graphical forms
QS8: Use and interpret quantitative and non-quantitative information
in order to make decisions

Knowledge
Up to 2 marks for defining inventory control diagram, e.g.

• An inventory control diagram shows details of inventory

movements (1) such as minimum and maximum inventory
levels, reorder level and quantity and lead times (1)

OR

For stating up to two ways, e.g.

• It shows the minimum inventory level, below which inventory
should never fall (1)
• It shows how many items to order (1)

Application
Up to 2 marks for answers contextualised to Greggs, e.g.
• The minimum inventory level is 10 vegan rolls (1)
• Greggs’ re-order quantity is 40 vegan rolls (1)

Analysis
Up to 2 marks for reasons/causes/consequences for Greggs, e.g.
• This means the shop will never run out of vegan rolls to sell (1)
• Therefore, Greggs can meet the expected customer demand for
the next day (1)
(6)
Question Indicative content
Number
1(d)
Indicative content guidance
Answers must be credited by using the level descriptors (below) in line with the
general marking guidance. The indicative content below exemplifies some of
the points that candidates may make but this does not imply that any of these
must be included. Other relevant points must also be credited.

Knowledge, Application, Analysis, Evaluation – indicative content

• Variance analysis shows the difference between budgeted and actual

figures and can be calculated at the end of a financial period, once actual
figures are known
• Variances can be calculated for expenditure and income and can be used
to monitor the costs of a business
• In January, Greggs had a favourable income variance of £12 870m because
its actual income was £97 870m and the budgeted amount was £85 000m
• The actual figure was higher than the budgeted figure, meaning Greggs
had performed better in terms of income at the start of 2019
• By using variance analysis, Greggs could try to identify reasons why the
variances occur, such as the publicity over the launch of the new vegan
rolls
• For example, Greggs may need to hire more employees to cater for an
increase in sales or purchase more ingredients to make the additional
savoury products being sold
• It could also help the bakery to deal with any problems that may have
occurred to lead to an adverse variance in its income or expenditure
• It can therefore help the business to be better prepared in the future
• However, it is difficult to set budgets as they are likely to be based on
historical data
• This means the figures are likely to be inaccurate as they can be
influenced by things like the poor weather affecting sales at Greggs in 2018
• It takes time and money to prepare budgets, which could be better used in
things like the development of new products (the vegan roll may not have
taken as long as 12 – 18 months to develop if more resources were used
on that instead of preparing budgets)
Level Mark Descriptor
0 No rewardable material.
Level 1 1–2 Isolated elements of knowledge and understanding – recall based.
Weak or no relevant application to business examples.
Generic assertions may be presented.
Level 2 3–5 Accurate knowledge and understanding, applied accurately to the
business and its context.
Chains of reasoning are presented, showing cause(s) and/or effect(s)
but may be assertions or incomplete.
An attempt at an assessment is presented that is unbalanced and
unlikely to show the significance of competing arguments.
Level 3 6–8 Accurate and thorough knowledge and understanding, supported
throughout by relevant and effective use of the business
behaviour/context.
Logical chains of reasoning, showing cause(s) and/or effect(s).
Assessment is balanced, well contextualised, using quantitative and/or
qualitative information, and shows an awareness of competing
arguments/factors.
Question Indicative content
Number
1(e) Indicative content guidance
Answers must be credited by using the level descriptors (below) in line with the
general marking guidance. The indicative content below exemplifies some of
the points that candidates may make but this does not imply that any of these
must be included. Other relevant points must also be credited.

Knowledge, Application, Analysis, Evaluation – indicative content

• Batch production is a method of manufacturing where a quantity of one

product is made, then a quantity of another item will be produced
• By using batch production, Greggs can benefit from lower unit costs of its
vegan rolls compared to job production
• This is because production is divided into a number of operations, it is
more efficient and so profitability can be increased
• Production of savoury products is flexible, meaning different customer
orders can be met more easily, increasing sales
• Each of the 1,950 shops will be able to cater for differing needs of its
customers
• Bakery employees are likely to specialise in one process, therefore the
quality of different products may be improved
• However, forecasts for a given product have to be accurate or food may
be wasted and thrown away, leading to an increase in costs
• If batches are small, unit costs will still be high (relative to flow
production)
• There could be less motivation because bakery employees specialise
• Time taken switching between different batches
• Overall, for a business such as Greggs that sells many different bakery
products, it has the advantage of meeting the differing quantity and
quality demanded by customers
• Whereas other products may be more suited to flow or job production
Level Mark Descriptor
0 A completely inaccurate response.
Level 1 1–2 Isolated elements of knowledge and understanding – recall based.
Weak or no relevant application to business examples.
Generic assertions may be presented.
Level 2 3–4 Elements of knowledge and understanding, which are applied to the
business example.
Chains of reasoning are presented, but may be assertions or
incomplete.
A generic or superficial assessment is presented.
Level 3 5–7 Accurate and thorough knowledge and understanding, supported
throughout by relevant and effective use of the business
behaviour/context.
Analytical perspectives are presented, with developed chains of
reasoning, showing cause(s) and/or effect(s).
An attempt at an assessment is presented, using quantitative and/or
qualitative information, though unlikely to show the significance of
competing arguments.
Level 4 8–10 Accurate and thorough knowledge and understanding, supported
throughout by relevant and effective use of the business
behaviour/context.
A coherent and logical chain of reasoning, showing cause(s) and/or
effect(s).
Assessment is balanced, wide ranging and well contextualised, using
quantitative and/or qualitative information and shows an awareness of
competing arguments/factors, leading to a supported judgement.
Question Answer Mark
Number
2(a) Knowledge 2

Up to 2 marks for defining the term ‘bank loan’, e.g.

• An external method of finance/money borrowed from a bank

(1) paid back, with interest (over a period of time) (1)
(2)
Question Answer Mark
Number
2(b) Knowledge 1, Application 2, Analysis 1
Quantitative skills assessed:

QS5: Calculate cost, revenue, profit and break-even

Knowledge

1 mark for identifying the formula for sales volume:

• Sales revenue
---------------- (1)
price

Application

Up to 2 marks for selecting the correct data from Extract C:

• 480 000 DKK = 40 000 DKK (1)

----------------
12

• 40 000 DKK
--------------
125 DKK (1)

Analysis

1 mark for calculating the sales volume:

• = 320 bibs (1)

NB: If no working is shown, award marks as follows:

• If the answer given is 320 bibs/units award 4 marks

• If the answer given is 320 award 3 marks
(4)
Question Answer Mark
Number
2(c) Knowledge 2, Application 2, Analysis 2

Knowledge
Up to 2 marks for defining sole trader, e.g.
• The simplest form of business (1) with only one owner (1)

OR

For stating up to two advantages, e.g.

• The owner has complete control (1)
• The owner can adapt to change quickly (1)

Application
Up to 2 marks for answers contextualised to Sew Sew, e.g.
• Gitte could make the decision to specialise in making bibs for
babies (1)
• Orders for speciality bibs may increase (1)

Analysis
Up to 2 marks for reasons/causes/consequences for Sew Sew, e.g.
• As Gitte is not required to discuss her business with anyone,
decision making can be very quick, allowing her to focus on
sewing and sales (1)
• Gitte can easily switch to producing different bibs so
customers are satisfied when orders are met promptly,
allowing Sew Sew to gain a positive reputation (1)
(6)
Question Indicative content
Number
2(d)
Indicative content guidance
Answers must be credited by using the level descriptors (below) in line with the
general marking guidance. The indicative content below exemplifies some of
the points that candidates may make but this does not imply that any of these
must be included. Other relevant points must also be credited.

Knowledge, Application, Analysis, Evaluation – indicative content

• Legislation can include things like consumer, employee and environmental

protection as well as competition policy and health and safety
• It is put in place by governments to ensure businesses produce goods and
services that are fit for purpose and are safe for consumers to use, as well
as provide a safe and healthy workplace
• Sole traders, such as Sew Sew, must still comply with legislation just like
other forms of business ownership but is less likely to be affected by as
many Acts due to the size and nature of the business
• Gitte does not have any employees and so Sew Sew does not need to
comply with health and safety legislation to provide and maintain suitable
protective clothing or provide adequate breaks for rest
• However, Sew Sew may need employees in the future and so the business
would then need to comply with legislation regarding health and safety or
it may be penalised
• Sew Sew must only sell bibs that are fit for purpose in order to comply with
consumer protection legislation
• Sew Sew uses a safer material to fasten the bibs as a result of following
European safety advice
• Sew Sew could benefit from following legislation beyond its requirements
as it could gain a reputation for having high standards
Level Mark Descriptor
0 No rewardable material.
Level 1 1–2 Isolated elements of knowledge and understanding – recall based.
Weak or no relevant application to business examples.
Generic assertions may be presented.
Level 2 3–5 Accurate knowledge and understanding, applied accurately to the
business and its context.
Chains of reasoning are presented, showing cause(s) and/or effect(s)
but may be assertions or incomplete.
An attempt at an assessment is presented that is unbalanced, and
unlikely to show the significance of competing arguments.
Level 3 6–8 Accurate and thorough knowledge and understanding, supported
throughout by relevant and effective use of the business
behaviour/context.
Logical chains of reasoning, showing cause(s) and/or effect(s).
Assessment is balanced, well contextualised, using quantitative and/or
qualitative information and shows an awareness of competing
arguments/factors.
Question Indicative content
Number
2(e) Indicative content guidance
Answers must be credited by using the level descriptors (below) in line with the
general marking guidance. The indicative content below exemplifies some of
the points that candidates may make but this does not imply that any of these
must be included. Other relevant points must also be credited.

Knowledge, Application, Analysis, Evaluation – indicative content

• A business plan is a document to provide information about a new

business and can be used to persuade financial backers to invest
• Financial forecasts are often included in a business plan. They may
include sales forecasts, break-even calculations, cash-flow forecast and
details of costs, revenues and profits
• Financial forecast may be the most important content because Gitte
obtained a bank loan when setting up Sew Sew and the bank would most
likely have been more willing to loan her the money having seen financial
forecasts in the business plan
• Gitte could estimate how many items she needs to sell to break-even
and/or to make a profit and help make Sew Sew successful
• She could also identify potential problems, such as not bringing in
enough revenue to earn as much as the 135 DKK per hour that she did at
her part-time job at McDonald’s
• This means she could make plans to resolve such problems and ensure
she has enough cash available to buy material, as well as to live on
• However, other content of a business plan may be more important, such
as an executive summary. This is because it summarises the whole
business plan and is likely to be something a bank would look at before
providing a loan
• The objectives of the business may also be more important as both Gitte
and any potential investors would want to know details of what the
business hoped to achieve. This might be survival in the first year Sew
Sew is in business
• It may be more important to show information about the market as it
would be useful to know whether Sew Sew has many direct competitors
• As Gitte’s plan was to work using her hobby of sewing, the owner‘s
background may be more important because it could show why Gitte
was motivated to start Sew Sew. Although her background of only having
a part-time job at McDonald’s prior to setting up Sew Sew may mean this
section is less important
• Overall, it is likely to have been important to include financial forecasts in
the business plan for Sew Sew but it may only be of equal importance as
the other elements because they collectively make up a successful plan
for the business
Level Mark Descriptor
0 No rewardable material.
Level 1 1–2 Isolated elements of knowledge and understanding – recall based.
Weak or no relevant application to business examples.
Generic assertions may be presented.
Level 2 3–4 Elements of knowledge and understanding, which are applied to the
business example.
Chains of reasoning are presented but may be assertions or
incomplete.
A generic or superficial assessment is presented.
Level 3 5–7 Accurate and thorough knowledge and understanding, supported
throughout by relevant and effective use of the business
behaviour/context.
Analytical perspectives are presented, with developed chains of
reasoning, showing cause(s) and/or effect(s).
An attempt at an assessment is presented, using quantitative and/or
qualitative information, though unlikely to show the significance of
competing arguments.
Level 4 8–10 Accurate and thorough knowledge and understanding, supported
throughout by relevant and effective use of the business
behaviour/context.
A coherent and logical chain of reasoning, showing cause(s) and/or
effect(s).
Assessment is balanced, wide ranging and well contextualised, using
quantitative and/or qualitative information, and shows an awareness
of competing arguments/factors, leading to a supported judgement.
Question Indicative content
Number
3 Indicative content guidance
Answers must be credited by using the level descriptors (below) in line with the
general marking guidance. The indicative content below exemplifies some of
the points that candidates may make but this does not imply that any of these
must be included. Other relevant points must also be credited.

Knowledge, Application, Analysis, Evaluation – indicative content

• Market conditions are affected by consumer trends, which change over

time. If businesses do not adapt to these changes, they may risk failure
• Consumers now prefer to download video games than buy physical
copies from stores (60% of US video game sales in 2018 were from
downloads)
• This means there has been a large decrease in sales of physical video
games from stores like GameStop
• Sales at GameStop fell 14.3% in one quarter of the current financial year,
which shows the decline in sales is increasing, as the fall was only 3.1%
in the whole of the previous year
• GameStop made a loss for the year of $673m showing that the decrease
in sales had a considerable impact.
• This means the change in market conditions was a major contributor to
the problems faced by GameStop, such as having to make 120
employees redundant in August 2019
• However, interest rates have been steadily rising in the US since 2016.
As GameStop made over $50m in interest payments in the last financial
year, this could have caused some of the problems for the business
• Competitors, such as IGN and Electronic Arts, may have a stronger brand
and/or more effective advertising and so be able to sell more video
games even without the change in market conditions
• Government regulations have been introduced because of concerns
over addiction and links with violence. This means that it will be more
difficult and possibly more expensive to sell video games because
GameStop would have to ensure it is complying with the legislation
• Health concerns may also have made it more difficult to make sales for
GameStop because consumers may reduce their demand due to the
negative publicity
• Internal causes may also have had an impact, such as management of
cash flow. The small increase in administrative expenses as a percentage
of sales, for example, shows that these may have had more of an impact
on the problems faced by GameStop than market conditions
• Overall, GameStop is having to close stores and make employees
redundant because of changes in market conditions but it is also
affected by several other internal and external causes that are likely to
have made the problem worse
Level Mark Descriptor
0 No rewardable material.
Level 1 1–4 Isolated elements of knowledge and understanding.
Weak or no relevant application of business examples.
An argument may be attempted, but will be generic and fail to connect
causes and/or consequences.
Level 2 5–8 Elements of knowledge and understanding, which are applied to the
business example.
Arguments and chains of reasoning are presented but connections
between causes and/or consequences are incomplete. Attempts to
address the question.
A comparison or judgement may be attempted but it will not
successfully show an awareness of the key features of business
behaviour or business situation.
Level 3 9–14 Accurate and thorough knowledge and understanding, supported
throughout by relevant and effective use of the business
behaviour/context.
Uses developed chains of reasoning, so that causes and/or
consequences are complete, showing an understanding of the
question.
Arguments are well developed.
Quantitative and/or qualitative information is introduced in an attempt
to support judgements, a partial awareness of the validity and/or
significance of competing arguments and may lead to a conclusion.
Level 4 15–20 Accurate and thorough knowledge and understanding, supported
throughout by relevant and effective use of the business
behaviour/context.
Uses well-developed and logical, coherent chains of reasoning,
showing a range of cause and/or effect(s).
Arguments are fully developed.
Quantitative and/or qualitative information is/are used well to support
judgements. A full awareness of the validity and significance of
competing arguments/factors, leading to balanced comparisons,
judgements and an effective conclusion that proposes a solution
and/or recommendations.
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