The following table shows trading data for FreshRoute Ltd, a private limited company that runs hypermarkets selling food and household goods. The directors ...
Question 1 Report
The following table shows trading data for FreshRoute Ltd, a private limited company that runs hypermarkets selling food and household goods. The directors want to decide whether to open a further hypermarket next year.
| Year | Number of hypermarkets | Sales revenue (£000) | Employees |
|---|---|---|---|
| 2024 | 6 | 18 600 | 420 |
| 2025 | 8 | 25 200 | 560 |
(a) Calculate the increase in sales revenue from 2024 to 2025. Give your answer in £000. [2]
(b) Calculate the average number of employees per hypermarket in 2025. [2]
(c) Identify the sector in which FreshRoute Ltd operates. [1]
(d) State two features of a private limited company. [2]
(e) Explain two possible benefits to FreshRoute Ltd of operating hypermarkets rather than small independent shops. [4]
(f) Give one reason why the directors should use more than sales revenue when deciding whether to open another store. [1]
Answer Details
(a) Sales revenue increased by:
\[\pounds25\,200\text{ thousand}-\pounds18\,600\text{ thousand}=\pounds6\,600\text{ thousand}\]
The increase is £6 600 thousand, or £6 600 000 [2].
(b)
\[560\div8=70\]
The average is 70 employees per hypermarket [2].
(c) FreshRoute Ltd is in the private sector, tertiary sector, or retail sector [1]. It is privately owned and sells goods to consumers.
(d) Two features of a private limited company are that it is owned by shareholders [1] and its shares cannot be sold to the general public [1]. Limited liability, separate legal identity and using “Ltd” are also valid.
(e) Hypermarkets can buy a large quantity of goods in bulk, reducing unit costs [1]. This allows lower prices for customers or higher profit margins [1]. They can also offer a wider product range, attracting more customers [1] and increasing sales [1]. Economies of scale in advertising or distribution, reducing cost per item, would be another developed benefit.
(f) Sales revenue alone does not show whether another store will be successful because profit may be low if costs are high [1]. Local demand, available finance and competition should also be considered.
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