Izaak runs a small fish restaurant. He employs two chefs (cooks) and three workers who serve in the restaurant. He has been trying to raise added value to improve profits. Izaak has been studying the business accounts shown in Table 1. He believes fixed costs are too high. Izaak has received several complaints about food and service. He feels that quality needs to improve, but he cannot choose the best method.
(a)[2]
What is meant by the term ‘added value’?
(b)[2]
What is meant by the term ‘cost of sales’?
(c)[4]
Identify and explain two different ways Izaak could increase revenue.
(d)[6]
Identify and explain two problems that low quality could create for Izaak’s business.
(e)[6]
Do you think Izaak should be satisfied with the financial performance of his business? Justify your answer using suitable ratios.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “Selling price minus cost of inputs” …