Question 1
10 marksText 2 — Fenbrook Juices Ltd
Fenbrook Juices Ltd is a private limited company that makes cold-pressed fruit juice. It sells to 140 independent cafés across the north of England and employs eight staff.
The owners, Dilan Osei and Marta Kovac, have been offered a contract to supply a national supermarket chain. To meet the order, Fenbrook Juices Ltd would have to spend £180 000 on new bottling equipment, paid for with a bank loan, and retrain four of its staff. The supermarket would pay a lower price per bottle than the cafés pay, and it can end the contract by giving three months' notice.
Dilan and Marta have produced forecasts for the first year of the contract.
| Without the supermarket contract | With the supermarket contract | |
|---|---|---|
| Forecast revenue | £620 000 | £915 000 |
| Forecast total costs | £560 000 | £810 000 |
| Forecast net profit | £60 000 | £105 000 |
State what is meant by the term 'reward' in business.
Calculate the percentage increase in Fenbrook Juices Ltd's forecast net profit if it accepts the supermarket contract.
Answer: _____________ %
Explain one risk to Fenbrook Juices Ltd of accepting the supermarket contract.
Analyse one reward for Fenbrook Juices Ltd of accepting the supermarket contract.