Callum and Jamie were bored with work. Both 21 years old, they had trained as plumbers but working for British Gas was getting dull, Jamie heard that there was a snack wagon for sale fully equipped with gas, electricity and a fridge and within three days they had found €3,000 each to buy the van. Their plan was to place the van permanently on a busy road between Wimbledon and Croydon, then employ someone to do the cooking. Callum and Jamie's role would be to keep the van supplied and to make key decisions, such as pricing. The pricing decisions were largely drawn from their experience of local snack bars: teas and Cokes at around £1, big burgers at about €3 and the occasional item rising above E4. They were able to set down a few details, as shown in the lable below. In addition to these costs, there would be fixed overhead costs such as rent, energy and labour costs. They allowed £500 per week for these. Table 6.2 Components and costs Item Components Cup of tea Tea bag, milk, sugar, plastic cup, spoon Frozen hamburger, onions, bun, ketchup, paper napkins Burger Chips Frozen chips, oil, paper cone, salt, vinegar, ketchup They served their first burgers in April and by October were making a modest profit. That same month they sold the business for £10,000. They had decided to move to Spain to make a living from plumbing, and later start up their own plumbing business. Total: 25 mmarks 1 (a) Calculate how much value is added by making a cup of tea at this snack wagon.(2) (b) Outline why it would be wrong to call this value added figure profit. (2) 2 Outline one way in which Callum and Jamie might have added more value to their snack bar. (2) 3 Identify the cost of ingredients for making a burger at Callum and Jamie's snack bar. (1) 5 4 Analyse how a good location can add value to a business such as Callum and Jamie's. (6) Evaluate whether Callum and Jamie are likely to be able to create more value added with their second business. You should use the information given above as well as your knowledge of business. (12) Bought-in costs per unit 12p 40p 30p Selling price €1.00 £3.00 £1.50 ​