Business Studies Common Level – Option ‘B’

Home , Business studies

J.23

Pre-Junior Cycle, 2020 Final Examination

Marking Scheme

9638dd7b-6110-409b-9600-60ccfe535e16 DEB

exams

Pre-Junior Cycle Final Examination, 2020

Business Studies

Common Level – Option ‘B’

Table of Contents

Common Level: Section A Q.1 ...... 4 Q.2 ...... 5 Q.3 ...... 6 Q.4 ...... 7 Q.5 ...... 8 Q.6 ...... 9 Q.7 ...... 10 Q.8 ...... 11 Q.9 ...... 12 Q.10 ...... 13 Q.11 ...... 13 Q.12 ...... 14 Q.13 ...... 15 Q.14 ...... 15 Q.15 ...... 16

Section B Q.16 ...... 17 Q.17 ...... 23 Q.18 ...... 27

DEB B 2020.1 J.23_MS 2/32 9638dd7b-6110-409b-9600-60ccfe535e16Page 2 of 31 exams

DEB

exams

Pre-Junior Cycle Final Examination, 2020

Business Studies

Common Level – Option ‘B’

Explanation

Conventions Used

1. A dash – before an answer indicates that the answer is a separate answer, which may be considered as independent of any other suggested answers to the question.

2. A single forward slash / before an answer indicates that the answer is synonymous with that which preceded it. Answers separated by a forward slash cannot therefore be taken as different answers.

3. A double forward slash // is used to indicate where multiple answers are given but not all are required.

4. Round brackets ( ) indicate material which is not considered to be essential in order to gain full marks.

5. ‘etc.’ is used in this marking scheme to indicate that other answers may be acceptable. In all other cases, only the answer given or ‘words to that effect’ may be awarded marks. In many instances only key words are given, i.e. words that must appear in the correct context in the student’s script in order to merit the assigned marks.

6. Answers which are given in this marking scheme should not be considered as the only possible answers that may be accepted. Answers which are synonymous with or equivalent to those in this marking scheme are also acceptable.

7. The detail required in any answer is determined by the context and the manner in which the question is asked and by the number of marks assigned to the answer.

Current Marking Scheme

Assumptions about these marking schemes on the basis of past SEC marking schemes should be avoided. While the underlying assessment principles remain the same, the exact details of the marking of a particular type of question may vary from a similar question asked by the SEC in previous years in accordance with the contribution of that question to the overall examination in the current year. In setting these marking schemes, we have strived to determine how best to ensure the fair and accurate assessment of students’ work and to ensure consistency in the standard of assessment from year to year. Therefore, aspects of the structure, detail and application of the marking schemes for these examinations are subject to change from past SEC marking schemes and from one year to the next without notice.

All rights reserved. This marking scheme and corresponding paper(s) are protected by Irish (EU) copyright law. Reproduction and distribution of these materials or any portion thereof without the written permission of the publisher is prohibited except for the immediate use within a classroom.

DEB B 2020.1 J.23_MS 3/32 9638dd7b-6110-409b-9600-60ccfe535e16Page 3 of 31 exams

DEB

exams

Pre-Junior Cycle Final Examination, 2020

Business Studies

Common Level – Option ‘B’ Marking Scheme (270 marks)

Section A (90 marks)

Answer all questions. All question carry equal marks.

Question 1 (6)

The graphic below shows the Irish Government’s income and expenditure for 2018.

(i) What is the largest area of expenditure for the Irish Government? (1m) (1)

– social benefits

DEB B 2020.1 J.23_MS 4/32 9638dd7b-6110-409b-9600-60ccfe535e16Page 4 of 31 exams

2020 JC Business Studies - Option ‘B’

Question 1 (cont’d.)

(ii) Distinguish between Capital Expenditure and Current Expenditure for the Irish Government. (4)

 Capital Expenditure (2m)

– spending on once-off projects or infrastructure that will have long-term benefits for the country and its citizens // etc.

 Current Expenditure (2m)

– the money spent by the government on a regular ongoing basis - majority of current expenditure involves the day-to-day provision of public services // etc.

** Accept student’s own wording if equivalent meaning conveyed. ** Accept other appropriate material.

(iii) Which Government Department is responsible for preparing Ireland’s National Budget? (1m) (1)

– Department of Finance (and the Department of Public Expenditure and Reform)

Question 2 (6)

The graph below shows the Irish Government’s planned expenditure by sector for 2020.

(i) Calculate the difference (in € billions) between the Irish Government’s planned expenditure on the health sector and the agriculture sector. (2m) (2)

– Difference = 18⋅33 – 1⋅65 = 16⋅68 (€ billion)

** Unit not required for full marks.

DEB B 2020.1 J.23_MS 5/32 9638dd7b-6110-409b-9600-60ccfe535e16Page 5 of 31 exams

2020 JC Business Studies - Option ‘B’

Question 2 (cont’d.)

(ii) The Government will spend an extra €1 billion on the health sector in 2020. Outline two reasons why the Government needs to increase spending on health. (4)

Any 2: (2 × 2m) – to fund the construction of new hospitals / medical units, e.g. new National Children’s Hospital // – to meet increased running costs // – to purchase fixtures and fittings / beds for hospitals // – for the provision of ambulances // – to purchase medical technology / medical / diagnostic / therapeutic equipment // – for the provision of IT / computers / telecommunications technology // – to address the issues of overcrowding / long waiting lists in Irish hospitals // – to fund an increase in staff, e.g. nurses, doctors, administrative staff, etc., to deal with an increase in demand for health services // – Ireland’s ageing population means there is a greater demand for health services, which requires additional funding // etc.

** Accept student’s own wording if equivalent meaning conveyed. ** Accept other appropriate answers.

Question 3 (6)

Explain the difference between carriage inwards and carriage outwards. (2 × 3m) (6)

 Carriage Inwards

– transport costs incurred by a company (1m) to transport purchases / raw materials (1m) into the company (1m)

 Carriage Outwards

– transport costs (and handling charges) incurred by a company (1m) delivering finished goods (1m) sold to customers (1m)

** Accept student’s own wording if equivalent meaning conveyed. ** Figures in brackets show the breakdown of marks if answer incomplete. ** Accept other appropriate material.

DEB B 2020.1 J.23_MS 6/32 9638dd7b-6110-409b-9600-60ccfe535e16Page 6 of 31 exams

2020 JC Business Studies - Option ‘B’

Question 4 (6)

Fiona’s house is valued at €250,000 but she has only insured it for €225,000. A fire causes €40,000 damage to the house.

(i) Calculate the amount of compensation to which Fiona would be entitled, given that there is a policy excess of €300. (3)

Insured Value – Compensation = × Loss – Excess Total Cost 225,000 = / 0⋅9 (1m) × 40,000 – 300 (1m) 250,000 = 36,000 – 300 = €35,700 (1m)

 Accept correct figure only. ** Award full marks for correct answer even if no workings are shown. ** Figures in brackets show the breakdown of marks if the final answer is incorrect or incomplete.

(ii) State and explain the principle of insurance relevant to the compensation she will receive. (3m) (3)

 Principle of insurance (2m)

– average clause

 Explanation

Any 1: (1m) – due to under-insurance, average clause applied to the compensation on the house // – a clause in an insurance policy that require a person to bear a proportion of any loss if the asset is insured for less than the full replacement value // – Fiona was considered to be her own insurer for one-tenth of the house // etc.

** Accept student’s own wording if equivalent meaning conveyed. ** Accept other appropriate material.

DEB B 2020.1 J.23_MS 7/32 9638dd7b-6110-409b-9600-60ccfe535e16Page 7 of 31 exams

2020 JC Business Studies - Option ‘B’

Question 5 (6)

Insurance companies may reward behaviours that reduce risk by lowering the cost of premiums.

Identify one factor that an insurance company may take into account when calculating the cost of each of the following insurance premiums. (3 × 2m) (6)

Factor 1. Health Insurance Any 1: – age // – sex // – current health status // – previous cover // – exercise regularly // – eat a healthy diet // – smoker // – alcohol consumption // etc. 2. Car Insurance Any 1: – age of the driver // – age of the car // – experience of the driver // – location / home address // – car alarm / immobiliser fitted // – limited mileage // – engine size, etc. 3. House Insurance Any 1: – location of house // – previous cover // – previous claims // – liable to flooding // – smoke alarm installed // – house alarm / monitored // – window locks // etc.

** Accept other appropriate answers.

DEB B 2020.1 J.23_MS 8/32 9638dd7b-6110-409b-9600-60ccfe535e16Page 8 of 31 exams

2020 JC Business Studies - Option ‘B’

Question 6 (6)

State two reasons why businesses carry out market research. (6)

Any 2: (2 × 3m) – to find out consumers’ needs and wants // – to discover if a market exists for a product / service // – to determine the size of a market for a product / service // – to determine where the market is located - local, national or international // – to determine the dominant age group for the product / service in the market // – to find the most suitable method of advertising to use / to find the method(s) of advertising and promotion that are most likely to succeed // – to work out a suitable selling price for a product / service / to determine the price that customers are willing to pay for a product / service // – to test a suitable name for a new product // – to find the most suitable method of distribution, e.g. through others or direct to the consumer // – to find out who the main competitors are and the share of market they already hold // – to identify why an existing product sells poorly // etc.

** Accept student’s own wording if equivalent meaning conveyed. ** Accept other appropriate answers.

DEB B 2020.1 J.23_MS 9/32 9638dd7b-6110-409b-9600-60ccfe535e16Page 9 of 31 exams

2020 JC Business Studies - Option ‘B’

Question 7 (6)

(i) Outline two differences between a ‘direct debit’ and a ‘standing order’. (4)

 Direct Debit (2m)

– permission given to a bank to pay a varied sum of money from a customer’s account to a certain person or company - the date of payment may vary // etc.

 Standing Order (2m)

– an instruction given to a bank to pay a fixed sum of money from a customer’s account to a certain person or company on a specific date // etc.

** Accept student’s own wording if equivalent meaning conveyed. ** Accept other appropriate answers.

(ii) Identify one benefit of online banking. (2)

Any 1: (2m) – 24/7 account and service access // – speed and efficiency // – online bill payment // – transactions can be viewed online / in real time // – instant transfer of money between accounts // – can sync with mobile applications // – several accounts can be managed easily // – lower banking fees resulting from lower costs // etc.

** Accept student’s own wording if equivalent meaning conveyed. ** Accept other appropriate answers.

DEB B 2020.1 J.23_MS 10/32 9638dd7b-6110-409b-9600-60ccfe535e16Page 10 of 31 exams

2020 JC Business Studies - Option ‘B’

Question 8 (6)

Outline two environmental benefits of this initiative. (6)

Any 2: (2 × 3m) – reduces the amount of waste going to landfill // – reduces our carbon footprint // – less litter in the landscape / on beaches / in the oceans / etc. // – reduces the hazards posed to wildlife and ecosystems // etc.

** Accept student’s own wording if equivalent meaning conveyed. ** Accept other appropriate answers.

DEB B 2020.1 J.23_MS 11/32 9638dd7b-6110-409b-9600-60ccfe535e16Page 11 of 31 exams

2020 JC Business Studies - Option ‘B’

Question 9 (6)

(i) State two benefits of online shopping for consumers. (4)

Any 2: (2 × 2m) – increased convenience - consumers can find what they are looking for without leaving their homes // – greater choice - consumers are not limited to local shops // – product details - consumers can research products in more detail online // – consumer reviews - many websites provide reviews from previous consumers about a product or service, allowing consumers to make a more informed decision // etc.

** Accept student’s own wording if equivalent meaning conveyed. ** Accept other appropriate answers.

(ii) Outline one social cost of online shopping. (2)

Any 1: (2m) – no human interaction during transactions // – increased unemployment as physical shops may close down // – increased spam email and unwanted advertising // – personal data may be held by businesses and unlawfully accessed // etc.

** Accept student’s own wording if equivalent meaning conveyed. ** Accept other appropriate answers.

DEB B 2020.1 J.23_MS 12/32 9638dd7b-6110-409b-9600-60ccfe535e16Page 12 of 31 exams

2020 JC Business Studies - Option ‘B’

Question 10 (6)

Complete and balance the following extract from a statement of account sent by Keegan Ltd to Hogan Ltd. (6)

Date Details Debit Credit Balance

€ € €

01/01/2020 Balance 1,750

06/01/2020 Invoice No. 211 2,650 4,400

08/01/2020 Payment received (CT) 3,880 520 (2m)

10/01/2020 Invoice No. 243 725 1,245 (2m)

13/01/2020 Credit Note No. 13 400 845 (2m)

Question 11 (6)

The demand and supply curves for ‘Fitbits’ are shown in the diagram below.

Supply (2m)

Demand (2m)

(i) Label the demand curve and the supply curve on the diagram above. (4)

(ii) Indicate the equilibrium price and equilibrium quantity of ‘Fitbits’. (2)

 Equilibrium price (1m)

– €200

 Equilibrium quantity (1m)

– 150,000

DEB B 2020.1 J.23_MS 13/32 9638dd7b-6110-409b-9600-60ccfe535e16Page 13 of 31 exams

2020 JC Business Studies - Option ‘B’

Question 12 (6)

(i) Joanne’s basic gross pay is €510 per week. How many hours per week does Joanne work if she is paid €12⋅75 per hour? (2)

Basic pay per week – Number of hours = Hourly rate 510 = (1m) 12⋅ 75 = 40 hours (1m)

(ii) Joanne’s wages are paid by ‘Paypath’. Identify two advantages of ‘Paypath’ to Joanne. (4)

Any 2: (2 × 2m) – safer method of payment as money is transferred directly to employee’s account / no risk of pay packet being lost or stolen // – employee has 24-hour / immediate access to his/her account / money / reduces any overdraft immediately / can withdraw cash from ATM // – more convenient as wages are lodged directly into an employee’s account / as an employee does not have to go to a bank to cash his/her wages cheque // – easy access to money through online and telephone banking / makes it easier to set up standing orders and direct debits so that individuals can pay bills // – some banks offer free-transaction banking for a period of time / 18 months after wages first paid through Paypath // etc.

** Accept student’s own wording if similar meaning is conveyed. ** Accept other appropriate answers.

DEB B 2020.1 J.23_MS 14/32 9638dd7b-6110-409b-9600-60ccfe535e16Page 14 of 31 exams

2020 JC Business Studies - Option ‘B’

Question 13 (6)

Suggest a suitable source of finance to make the following business purchases. (3 × 2m) (6)

Purchases Source of Finance Stock Any 1: – trade credit // – bank overdraft // – credit card // etc. Premises Any 1: – long-term loan / debenture // – issued share capital // – retained earnings // etc. Vehicles Any 1: – leasing // – hire purchase // – term loan // etc.

** Accept other appropriate answers.

Question 14 (6)

Complete the Trading Account of Penny Ltd for the year ended 31/12/2019: (6)

Trading Account of Penny Ltd for the year ended 31/12/2019

€ €

Sales 715,000

Less Cost of sales

Opening Stock 40,000

Purchases 395,000

435,000 (2m)

Less Closing Stock 25,000 (2m)

Cost of Sales 410,000

Gross Profit 305,000 (2m)

DEB B 2020.1 J.23_MS 15/32 9638dd7b-6110-409b-9600-60ccfe535e16Page 15 of 31 exams

2020 JC Business Studies - Option ‘B’

Question 15 (6)

Ireland exported over €1 billion of meat to the United Kingdom (UK) in 2018.

Outline two difficulties that Ireland might face when exporting meat to the UK after it leaves the European Union. (6)

Any 2: (2 × 3m) – may lead to reduced meat exports to the UK, which would result in less profits / business / employment for the meat industry // – may lead to more expensive exports if trade barriers / tariffs / quotas are introduced between the UK and the EU, resulting in meat exported to the UK being more expensive for British consumers to buy and leading to less consumption / demand // – increased administrative costs associated with exporting to the UK - may have to spend more on ‘red tape’ and administrative costs - reducing sales / profits // – uncertainty about the UK’s future relationship with the EU may lead to a fall in economic growth / recession in the UK - reduce demand / negative impact on the Irish meat industry exporting to the UK // etc.

** Accept student’s own wording if equivalent meaning conveyed. ** Accept other appropriate answers.

DEB B 2020.1 J.23_MS 16/32 9638dd7b-6110-409b-9600-60ccfe535e16Page 16 of 31 exams

2020 JC Business Studies - Option ‘B’

Section B (180 marks)

Answer all questions. Each question carries 60 marks.

Question 16 (60)

Happy Home Ltd is a home wares retailer located in Oranmore, Co. Galway.

(a) (i) Indicate in each case whether the business needs of Happy Home Ltd listed below are short term, medium term or long term. Tick () the correct box below. (5 × 1m) (5)

Business Need Short Term Medium Term Long Term Wages  New computers  Light and heat  Insurance  Expansion 

Happy Home Ltd wishes to expand its business to include a second location in Co. Galway. The company has been advised to complete a cost-benefit analysis and prepare a business plan for the proposal.

(ii) Explain one benefit to Happy Home Ltd of completing a cost-benefit analysis. (3)

Any 1: (3m) – it may help with decision-making about their expansion // – it helps to provide clarity / to simplify complex business decisions // – can give an idea of the lowest amount of revenue needed for the new project in order to break even and help set revenue goals to make projects profitable // etc.

** Accept student’s own wording if equivalent meaning conveyed. ** Accept other appropriate answers.

DEB B 2020.1 J.23_MS 17/32 9638dd7b-6110-409b-9600-60ccfe535e16Page 17 of 31 exams

2020 JC Business Studies - Option ‘B’

Question 16 (cont’d.)

(a) (cont’d.)

(iii) Outline two reasons why Happy Home Ltd should prepare a business plan. (6)

Any 2: (2 × 3m) – to establish the company’s objectives into the future // – to establish short-term / medium-term / long-term targets against and ascertain how achievements can be measured // – to identify strengths, weaknesses, opportunities and threats (SWOT) to the business // – to support an application for finance, e.g. loans from banks / grants from government agencies // – to set out a framework within which to run the business / to focus the management of the business on what is important // – to determine the size of financial commitments // – to attract further investment from existing shareholders / to show potential investors // – to identify ways to promote the business / products / to identify new markets / sales possibilities in existing markets // – to show the resources, financial and non-financial, required to achieve the company’s goals // – to reduce risk by helping Happy Home Ltd think through their ideas very carefully // – to give the directors of the company a map to follow to reach its business objectives // etc.

** Accept student’s own wording if equivalent meaning conveyed. ** Accept other appropriate answers.

DEB B 2020.1 J.23_MS 18/32 9638dd7b-6110-409b-9600-60ccfe535e16Page 18 of 31 exams

2020 JC Business Studies - Option ‘B’

Question 16 (cont’d.)

(b) As part of the expansion plan, Happy Home Ltd intends to develop a website.

(i) Outline two features that you think Happy Home Ltd should include in the design of its new website. Give a reason for each feature. (8)

Two Features (2 × 2m) Reason for each feature (2 × 2m)

– a clear description of what the company does, history of the company, key personnel within the company - so that customers know exactly who they are dealing with // – an easily navigated site map - with clear links to the most important pages so that visitors are directed to the information they need / use dropdown menus under each heading // – contact information - make it easy for customers to get in touch by making your contact details easy to find // – customer reviews/testimonials - helps to build trust in potential customers as they hear stories from others who purchased products from the website // – a secure hosting platform - so that the business and its customers are secure // – an online-friendly design - simple and basic colours / highlight important words or phrases / nice images, etc. // etc.

** Accept student’s own wording if equivalent meaning conveyed. ** Accept other appropriate answers.

(ii) Suggest two ways, other than developing a website, that technology could be used to increase sales for Happy Home Ltd. (6)

Any 2: (2 × 3m) – developing an app, which could, for example, offer subscribers special discounts // – advertising on social media, e.g. Facebook, Instagram, etc. // – automated emails to existing customers providing information on the latest offers / products // – set up a Twitter account to make links with customers and other contacts // etc.

** Accept student’s own wording if equivalent meaning conveyed. ** Accept other appropriate answers.

(iii) Outline one challenge that the introduction of new technology presents to businesses. (4)

Any 1: (4m) – capital costs of purchasing and maintaining new technologies require businesses to budget for this // – keeping new technology up-to-date requires additional resources // – employees may require additional training in the use of new technology // – if the new technology isn’t working properly, there may be loss of revenue - lost data can also be expensive to retrieve // etc.

** Accept student’s own wording if equivalent meaning conveyed. ** Accept other appropriate material.

DEB B 2020.1 J.23_MS 19/32 9638dd7b-6110-409b-9600-60ccfe535e16Page 19 of 31 exams

2020 JC Business Studies - Option ‘B’

Question 16 (cont’d.)

(i) Explain one financial impact, one social impact and one environmental impact of this initiative on a small area in rural Ireland. (12)

 Financial impact

Any 1: (4m) – direct employment in the local area as well as spin-off business such as transport, banking, etc. // – local employees will have disposable income, leading to an improved standard of living // – increased spending in the local community, which supports other businesses (the multiplier effect) // – the increase in business will lead to economic growth in the area // etc.

 Social impact

Any 1: (4m) – seeing local entrepreneurs succeed can help to develop a culture of enterprise in the area // – improved quality of life leads to an increase in community spirit and social interactions // etc. – may attract more people to live in the area // etc.

 Environmental impact

Any 1: (4m) – reduced carbon footprint as goods are sourced locally, reducing transport needs // – it may mean that local suppliers can use facilities that would otherwise be vacant, which in turn will improve the local environment // etc.

** Accept student’s own wording if equivalent meaning conveyed. ** Accept other appropriate material.

(ii) State one advantage and one disadvantage of selling online for a business. (6)

 Advantage

Any 1: (3m) – global market - much wider potential market than for a traditional shop / goods can be sold all over the world // – 24/7 sales - customers in different time zones can buy goods at any time of day // – reduced operating costs due to less rent, insurance, staff, etc. // – online marketing - customers give businesses their email addresses and other data when they buy online - the business can then use this information to market other products // – immediate communication with and feedback from customers // – helps smaller businesses to compete - online selling makes it easier for smaller businesses or those in remote locations to compete with larger ones // – increased brand awareness - many shoppers search for products online before deciding where to buy. If they find a business in their search results, they may be more likely to buy from it // – social media - can be a cheap and effective way to advertise products and attract customers to an online store // etc.

** Accept student’s own wording if equivalent meaning conveyed. ** Accept other appropriate answers.

DEB B 2020.1 J.23_MS 20/32 9638dd7b-6110-409b-9600-60ccfe535e16Page 20 of 31 exams

2020 JC Business Studies - Option ‘B’

Question 16 (cont’d.)

 Disadvantage

Any 1: (3m) – website costs - designing and maintaining a professional e-commerce website isn’t cheap, especially if you expect large and growing sales volumes // – infrastructure costs of the space needed for order fulfilment, e.g. warehousing goods, dealing with returns and staffing for these tasks // – security and fraud - the growth of online retail market has attracted the attention of sophisticated criminal elements so good security systems are needed to protect the website and transaction processes // – legal issues - being aware of the additional customer rights which are attached to online sales // – customer trust - it can be difficult to establish a trusted brand name, especially without a physical business with a track record and face-to-face interaction between customers and sales staff - good customer service system is an essential part of the online business // etc.

** Accept student’s own wording if equivalent meaning conveyed. ** Accept other appropriate answers.

(d) Consumers as well as businesses have ethical responsibilities.

(i) Outline two ethical responsibilities that consumers have when purchasing online or in-store. (6)

Any 2: (2 × 3m) – to shop in a way that supports your values and choose brands accordingly // – to research the product you are buying to find out the story behind it - don’t buy based on price and quality alone // – to read product labels to give insight into the social and environmental costs of a product // – to distinguish between needs and wants and avoid non-recyclable and disposable products // – to use your purchasing power to influence business - by choosing ethically sound businesses you are voting with your money for a better world // – to be aware of the impact of your decisions - boycotting products is a way of protesting against how a certain business operates // – to buy from companies that provide fair wages and working conditions for their workers, i.e. Fairtrade // – to choose nutritious food rather than fast food / snacks // – to choose products that do not contain chemicals which could damage your health or the environment // – to choose cosmetics that are not tested on animals // – to avoid mass-produced food products that are factory-farmed // – to avoid products that are produced at the cost of habitats of plant and animal species, e.g. cutting down rainforests to produce palm oil // etc.

** Accept student’s own wording if equivalent meaning conveyed. ** Accept other appropriate answers.

DEB B 2020.1 J.23_MS 21/32 9638dd7b-6110-409b-9600-60ccfe535e16Page 21 of 31 exams

2020 JC Business Studies - Option ‘B’

Question 16 (cont’d.)

(d) (cont’d.)

(ii) Explain one impact of ethical consumerism on businesses. (4)

Any 1: (4m) – there is an increased emphasis on corporate social responsibility (CSR) to increase / improve public relations // – businesses need to be more conscious of their environmental impact / carbon footprint // – certification to show that businesses are seeking better pay and conditions of workers and avoid exploitation // – some businesses make a clear commitment to avoid products / activities that harm nature, e.g. cosmetics tested on animals // – there is an increased demand for products made from sustainable resources and technologies // etc.

** Accept student’s own wording if equivalent meaning conveyed. ** Accept other appropriate answers.

DEB B 2020.1 J.23_MS 22/32 9638dd7b-6110-409b-9600-60ccfe535e16Page 22 of 31 exams

2020 JC Business Studies - Option ‘B’

Question 17 (60)

(a) A budget is an essential part of running any family household.

(i) What is a budget? (3)

Any 1: (3m) – a forecast / plan (1m) of future income and expenditure (1m) for a specific time period (1m) // – a financial plan (1m) of expected income and expenditure (1m) for a specific time period (1m) // – a statement (1m) of estimated income and expenses (1m) for a set period of time (1m) // – an estimate (1m) of income and expenditure (1m) for a set period of time (1m) // etc.

** Accept student’s own wording if equivalent meaning conveyed. ** Figures in brackets show the breakdown of marks if the answer is incomplete. ** Accept other appropriate answers.

(ii) Give two reasons why family households should prepare a budget. (4)

Any 2: (2 × 2m) – to estimate total income for each month and for the period in total // – to estimate total expenditure for each month and for the period in total // – to identify which months will have a surplus or deficit // – to estimate whether or not there will be a surplus and what might be done with that surplus // – to estimate whether or not there will be a deficit and how it might be eliminated or financed // – to identify expensive months / times of year / to show in which months / times of year there will be numerous bills in order that they can spread out payments // – to identify the main areas of expenditure within the household budget // – to ensure that they live within their household income / to ensure they have enough money to pay all their bills // – to plan to live within their income / plan income and expenditure // – budgeting is the basis for good financial management // – to support a loan application / to show to a bank / credit union when asking for a loan / mortgage // – to project the closing cash at the end of each month // etc.

** Accept student’s own wording if equivalent meaning conveyed. ** Accept other appropriate answers.

DEB B 2020.1 J.23_MS 23/32 9638dd7b-6110-409b-9600-60ccfe535e16Page 23 of 31 exams

2020 JC Business Studies - Option ‘B’

Question 17 (cont’d.)

(b) The Foley household use an Analysed Cash Book to keep a record of their financial transactions. On 1 Jan 2020, they had a balance of €270 in their bank account.

During January they had the following bank transactions:

03/01/2020 Received Ben Foley’s salary €2,000 06/01/2020 Paid for petrol €80 07/01/2020 Received child benefit €280 10/01/2020 Paid for groceries €240 11/01/2020 Received Maria Foley’s salary €950 15/01/2020 Bought tickets for music festival €320 19/01/2020 Paid electricity bill €205 21/01/2020 Paid house insurance €640 25/01/2020 Paid for car repairs €355 26/01/2020 Paid for groceries €190 30/01/2020 Paid house mortgage €1,400

Write up the Analysed Cash Book of the Foley household for the month of January 2020. Total each analysis column and balance the bank columns at the end of January. (16)

Dr Analysed Cash Book of the Foley Household Cr Date Details Bank Wages Child Date Details Bank Groceries Mortgage Household Other Benefit Bills 2020 € € € 2020 € € € € € 01/01 Balance b/d 270 (1) 06/01 Petrol 80 (1) 80 03/01 Ben’s salary 2,000 (1) 2,000 10/01 Groceries 240 (1) 240 07/01 Child benefit 280 (1) 28015/01 Tickets 320 (1) 320 11/01 Maria’s salary 950 (1) 950 19/01 Electricity 205 (1) 205 21/01 Insurance 640 (1) 640 25/01 Car repairs 355 (1) 355 26/01 Groceries 190 (1) 190 30/01 Mortgage 1,400 (1) 1,400 3,430 31/1 Balance c/d 70 (1) 3,500 2,950 280 3,500 430 1,400 205 1,395 01/02 Balance 70 (1)

Date column - Dr & Cr sides (1) Details column - Dr & Cr sides (1)

 Allow full marks for student’s own figure if consistent with previous work.  Accept correct figure only.

DEB B 2020.1 J.23_MS 24/32 9638dd7b-6110-409b-9600-60ccfe535e16Page 24 of 31 exams

2020 JC Business Studies - Option ‘B’

Question 17 (cont’d.)

(c) At the end of the month the Foley household compared their planned income and expenditure with their actual income and expenditure from their Analysed Cash Book.

(i) Complete the Budget Comparison Statement below by entering the appropriate figures, from the Analysed Cash Book you have prepared, into the “Actual” column. (14)

Then show the differences between the “actual” and “budget” figures by completing the column marked “Difference”. Use a plus or minus sign in front of each figure in that column.

Note: Use plus sign (+), if “actual” is GREATER than the “budget” figure. Use minus sign (–), if “actual” is LESS than the “budget” figure.

Example: The first row “Wages” has been completed for you.

Budget Comparison Statement Budgeted Actual Difference

Income

Wages (given) 2,800 2,950 + 150

Child Benefit 280 280 (1m) ––

Total Income 3,080 3,230 + 150 (1m)

Expenditure

Groceries 500 430 (1m) – 70 (1m)

Mortgage 1,300 1,400 (1m) + 100 (1m)

Household Bills 1,400 205 (1m) – 1,195 (1m)

Other –– 1,395 (1m) + 1,395 (1m)

Total Expenditure 3,200 3,430 + 230 Net Cash (120) (1m) (200) (1m) – 80 (2m)

 Allow full marks for student’s own figure if consistent with previous work.  Accept correct figure only.

(ii) Give two pieces of advice you would offer the Foley family in relation to their finances. (4)

Any 2: (2 × 2m) – do not plan a budget with a deficit // – increase and stabilise income per month, e.g. undertake overtime // – cut down on expenditure (can use example) // – cut back on discretionary expenditure / rearrange expenditure // – spread annual payments / insurance more evenly throughout the year // etc.

** Accept student’s own wording if equivalent meaning conveyed. ** Accept other appropriate answers.

DEB B 2020.1 J.23_MS 25/32 9638dd7b-6110-409b-9600-60ccfe535e16Page 25 of 31 exams

2020 JC Business Studies - Option ‘B’

Question 17 (cont’d.)

(d) (i) The Foley family have taken out a loan for €12,000 from their local credit union to pay for a kitchen renovation.

Outline two risks to the Foley family of taking out a loan for this purpose. (6)

Any 2: (2 × 3m) – it may lead to scarcity of money for regular bills such as electricity, mortgage, etc. // – the Foleys may receive a bad credit rating if they are unable to pay back the loan taken out // – it may lead to opportunity cost - having to sacrifice one item as a consequence of renovating the kitchen // – the Foleys may go into overdraft in order to meet their basic monthly expenses, which may in turn lead to more expenses due to interest accrued // etc.

** Accept student’s own wording if equivalent meaning conveyed. ** Accept other appropriate material.

(ii) As part of the renovation, the Foley family purchased a new washing machine. After one week, it was discovered that the water did not drain at the end of a wash cycle.

Name the law that protects the Foley family in this case. (3m) (3)

– Sale of Goods and Supply of Services Act (2m), 1980 (1m)

** Figures in brackets show the breakdown of marks if the answer incomplete.

(iii) Identify two agencies that the Foley family could contact for help with their complaint. (4)

Any 2: (2 × 2m) – Competition and Consumer Protection Commission (CCPC) // – Small Claims Court // – Consumer Association of Ireland (CAI)

(iv) State three reasons why consumers need protection. (6)

Any 3: (3 × 2m) – consumers need protection from goods/services which are faulty, damaged, poor quality or unsafe // – consumers need protection against traders making false claims regarding prices, e.g. price now €10 was €20, when it was never offered for sale at €20 // – consumers need protection against traders who provide misleading information or false advertising in relation to goods or services for sale, e.g. describing shoes as being made from genuine leather when they are made from synthetic leather // – to protect consumers against aggressive selling, e.g. pressuring consumers to buy now as the price will increase tomorrow // – to protect consumers from exploitation by retailers // etc.

** Accept student’s own wording if equivalent meaning conveyed. ** Accept other appropriate answers.

DEB B 2020.1 J.23_MS 26/32 9638dd7b-6110-409b-9600-60ccfe535e16Page 26 of 31 exams

2020 JC Business Studies - Option ‘B’

Question 18 (60)

(a)

(i) Explain two reasons why international trade is important to Ireland. (6)

Any 2: (2 × 3m) – Irish market is small / limited and therefore Irish businesses need to trade internationally to grow // – international trade allows Irish businesses to increase sales and profits thus expanding and creating employment // – international trade allows Irish businesses to increase sales and profits, which in turn increase tax revenues for the state // – provides foreign currency, which can be used to pay for imports // – other countries lack natural resources / skills / traditions that Ireland has, e.g. agricultural produce / meat, crystal glass, Aran jumpers, etc., which provides trade opportunities for Irish businesses // – international trade allows Irish businesses to expand and benefit from economies of scale // – revenue and profits generated from international trade by Irish businesses, e.g. banking, insurance, tourism, enter into Ireland // etc.

** Accept student’s own wording if equivalent meaning conveyed. ** Accept other appropriate answers.

(ii) Outline two barriers to international trade. (4)

Any 2: (2 × 2m) – tariffs - taxes that countries add to imports to make them more expensive and less attractive in an attempt to encourage consumers to buy home-produced products // – quota - some countries put a limit on the amount of a particular good that can be imported // – embargo - a country can ban certain goods from being imported // – subsidies - support by way of payments given to businesses to reduce costs and make exports cheaper // etc.

** Accept student’s own wording if equivalent meaning conveyed. ** Accept other appropriate answers.

(iii) Six of Ireland’s top ten goods export markets – Germany, Belgium, France, the Netherlands, Italy and Spain – are in the Eurozone.

European Commission, November 2019

What is the ‘Eurozone’? (3m) (3)

– the economic region (1m) formed by those member countries of the European Union (1m) that have adopted the euro (1m)

** Accept student’s own wording if equivalent meaning conveyed. ** Figures in brackets show the breakdown of marks if the answer is incomplete. ** Accept other appropriate material.

DEB B 2020.1 J.23_MS 27/32 9638dd7b-6110-409b-9600-60ccfe535e16Page 27 of 31 exams

2020 JC Business Studies - Option ‘B’

Question 18 (cont’d.)

(b) Pfizer is one of the world’s largest pharmaceutical companies and employs over 3,300 people in six locations in Ireland. Susan Farrell recently accepted a research job with Pfizer.

(i) Explain two reasons why many global companies have chosen to locate in Ireland. (6)

Any 2: (2 × 3m) – to avail of lower taxes / corporation taxes // – Ireland is an English-speaking country, which is the international language of business // – Ireland is a member of the EU (and the only English-speaking country in the Eurozone) - this gives global companies free movement and duty-free movement of goods within this market // – Ireland is part of the Eurozone and also of the SEM (Single European Market), which encourages investment by global companies in Ireland because Ireland is part of a trading block that uses the same currency so currency fluctuations is less of an issue // – available pool of skilled, highly-educated, English-speaking labour force // – low rate of inflation encourages investment as global companies do not want to invest in economies with rising cost bases // – low interest rates, which are set by the ECB, encourage borrowing and global companies favour low interest rate economies // – government grants and support - IDA Ireland offers grants to global companies to attract inward investment // – improving infrastructure - communications network is rapidly being improved // – centralised partnership agreements / social partners - low level of industrial unrest // – political and economic stability - low level of industrial unrest // etc.

** Accept student’s own wording if equivalent meaning conveyed. ** Accept other appropriate answers.

(ii) State two reasons why people are attracted to work for global companies. (4)

Any 2: (2 × 2m) – can offer a diverse working environment - a person may be exposed to multiple areas of the business // – may offer opportunities for international travel / work abroad // – may offer better perks - global companies are often big enough to have the resources to provide employees with great perks // – work may be more flexible as global companies often work with remote teams using technology to connect people // – there may be better job opportunities in the future // – a larger network of people / a chance to learn about other cultures // – an opportunity to use more innovative technology as global companies have a greater capacity to use big data / smart analytics / robotics, etc. // etc.

** Accept student’s own wording if equivalent meaning conveyed. ** Accept other appropriate answers.

DEB B 2020.1 J.23_MS 28/32 9638dd7b-6110-409b-9600-60ccfe535e16Page 28 of 31 exams

2020 JC Business Studies - Option ‘B’

Question 18 (cont’d.)

(b) (cont’d.)

(iii) State one advantage and one disadvantage of globalisation for the consumer. (6)

 Advantage

Any 1: (3m) – greater variety of goods and services available to consumers to choose from // – global products can be purchased easily in many shops and online // – worldwide access to consumers who can purchase products from different countries // – global products are often cheaper than locally produced items, which encourages consumers to buy them // – increased competition between countries helps to drive prices down for consumers // – increased competition often results in better quality goods and services // – global communications means that consumers are influenced by different cultures, which affect what they buy and consume // – greater employment opportunities - transnational companies (TNCs) provide new jobs and skills for local people // – new experiences - sharing of ideas, experience and lifestyles of different cultures - people can choose to buy foods and other products not previously available to them // etc.

 Disadvantage

Any 1: (3m) – it benefits rich countries more than poor countries - globalisation operates mostly in the interests of the richest countries, which dominate world trade at the expense of poorer ones // – no guarantee that the wealth from inward investment will benefit the local people where the company operates - often profits are repatriated to the home country of the transnational company // – due to economies of scale, transnational companies may drive small local companies out of business // – concerns in relation to the exploitation of labour as the cost of producing goods and services is driven down // – the use of genetically modified (GM) foods to produce cheaper food is a concern for many consumers // – the destruction of rainforests to facilitate increased farming / resourcing materials, e.g. palm oil, worries many environmentally-conscious consumers // – increased carbon footprint in transporting goods worldwide // etc.

** Accept student’s own wording if equivalent meaning conveyed. ** Accept other appropriate material.

DEB B 2020.1 J.23_MS 29/32 9638dd7b-6110-409b-9600-60ccfe535e16Page 29 of 31 exams

2020 JC Business Studies - Option ‘B’

Question 18 (cont’d.)

(b) (cont’d.)

(iv) Susan’s position with Pfizer earns her a monthly wage of €6,600. She pays PAYE at the rate of 40% and has a monthly tax credit of €275. She pays PRSI at 4% and USC at 5⋅5%. Her monthly ‘cycle to work’ scheme deduction is €50.

Using the details above, complete Susan’s payslip for 31/01/2020. (12)

Payslip Employee Name: Susan Farrell Date: 31/01/2020 (1m)

Earnings Deductions

Basic Wage 6,600⋅00 (1m) PAYE 2,365⋅00 (3m)

PRSI 264⋅00 (1m)

USC 363⋅00 (1m)

Cycle to work 50⋅00 (1m)

Gross Pay 6,600⋅00 (1m) Total Deductions 3,042⋅00 (1m)

Net Pay 3,558⋅00 (2m)

Workings:

 PAYE – Tax = 6,660⋅00 × 40% (1m) 2,640⋅00 Less Tax Credits = 275⋅00 (1m) 2,365⋅00 (1m)

 PRSI – = 6,660⋅00 × 4% 264·00 (1m)

 USC – = 6,660⋅00 × 5⋅5% 363·00 (1m)

(v) Susan’s payslip shows four deductions. Complete the blanks below: (5)

on-statutory (2m)

niversal (1m) ocial (1m) harge (1m)

DEB B 2020.1 J.23_MS 30/32 9638dd7b-6110-409b-9600-60ccfe535e16Page 30 of 31 exams

2020 JC Business Studies - Option ‘B’

Question 18 (cont’d.)

(c)

(i) Susan is hoping to buy a house shortly and is paying close attention to interest rates.

Explain the impact of high interest rates on individuals like Susan and on the economy. (6)

 Impact on individual

Any 1: (3m) – they will have less disposable income, which will lead to a reduced standard of living for the individual // – they will be prevented from borrowing // – they will be more likely save rather than spend as there is a higher return on savings // etc.

 Impact on economy

Any 1: (3m) – because of a reduction in disposable income, less spending impacts revenue for government and economic growth // – businesses may decide not to borrow or expand, creating fewer jobs // – the economy will be less competitive // – inflation will decrease // – the cost of servicing the national debt will be greater // etc.

** Accept student’s own wording if equivalent meaning conveyed. ** Accept other appropriate answers.

(ii) Interest rates are a key economic indicator that affects the Irish economy.

Name two other economic indicators. (4)

Any 2: (2 × 2m) – inflation // – national income // – national debt // – Gross Domestic Product (GDP) // – (un)employment rates // – consumer price index (CPI) // etc.

** Accept other appropriate answers.

(iii) Susan was considering attending a friend’s wedding in Spain next summer but she has decided not to attend the wedding in order to boost her savings.

Using the above information explain what is meant by ‘opportunity cost’. (4)

– by not attending the wedding / not travelling to Spain (2m), Susan will be able to boost her savings (2m)

** Accept student’s own wording if equivalent meaning conveyed. ** Figures in brackets show the breakdown of marks if the answer is incomplete.

DEB B 2020.1 J.23_MS 31/32 9638dd7b-6110-409b-9600-60ccfe535e16Page 31 of 31 exams

DEB B 2020.1 J.23_MS 33/32 9638dd7b-6110-409b-9600-60ccfe535e16Page 33 of 31 exams