ICSE Class 10 Commercial Applications Board Exam Question Paper 2017 with Solutions

ICSE Class 10 Commercial Applications Board Exam Question Paper with Solutions 2017

SECTION A [40 Marks]

(Attempt all questions from this Section)

Question 1.
State one difference between each of the following:

(a) Consumer Goods and Producers' Goods [2 Marks]

Answer:

Teacher's Note:
a) Consumer goods satisfy human wants directly, whereas producers' goods satisfy them indirectly by helping in production.
b) Students must include clear examples for both categories to score full marks.

(b) Orientation Training and Refresher Training [2 Marks]

Answer:

Teacher's Note:
a) Orientation is meant for inducting new recruits into the system, whereas refresher training is meant for updating the existing staff.
b) Focus on the timing and objective of each type of training during exams.

(c) Transfer and Promotion [2 Marks]

Answer:

Teacher's Note:
a) Transfer involves no change in status or salary, whereas promotion brings an upgrade in designation, authority, and pay.
b) Use the terms horizontal movement and vertical movement for precise definitions.

(d) Historical Costs and Predetermined Costs [2 Marks]

Answer:

Teacher's Note:
a) Historical costs are actual costs based on past transactions, while predetermined costs are futuristic estimations used for budgeting.
b) Distinguish clearly based on the time of computation - before or after production.

(e) Advertising and Publicity [2 Marks]

Answer:

Teacher's Note:
a) Advertising is a paid form of non-personal communication, whereas publicity is generally non-paid news coverage through media.
b) Highlight the payment aspect and control over the message as key points of difference.

Question 2.
(a) Mention two features of Services. [2 Marks]

Answer:
1. Services are intangible as they cannot be seen or touched. They have no physical shape.
2. Services are produced and consumed at the same time. The service cannot be separated from the service provider.

Teacher's Note:
a) Intangibility and inseparability are core characteristics of services that distinguish them from physical goods.
b) Students must write both points clearly with brief explanations as demanded by the marks.

(b) What are indirect expenses ? Give an example. [2 Marks]

Answer:
Indirect expenses are those expenses which cannot be wholly and directly identified with a specific product or job.
For example: Rent, lighting, insurance charges, depreciation etc.

Teacher's Note:
a) Indirect expenses form part of overheads and are apportioned across various departments or products.
b) Always provide a relevant business example when asked to define cost terms.

(c) Mention the advantages of Cost plus pricing. [2 Marks]

Answer:
1. Cost plus pricing ensures full coverage of costs and helps in achieving a reasonable return on capital employed.
2. This is most widely used technique of pricing and safe approach because it guarantees profit margin over production cost.

Teacher's Note:
a) Cost-plus pricing simplifies price determination by adding a standard markup to the total cost.
b) Mention at least two clear points since it carries two marks.

(d) Explain any two impacts of Acid Rain. [2 Marks]

Answer:
1. Damage to aquatic life: Acid rain lowers the pH levels of lakes and streams, making the water acidic and killing fish and other aquatic organisms.
2. Damage to forests and vegetation: It washes away essential nutrients from the soil and damages leaves, weakening trees and making them vulnerable to diseases.

Teacher's Note:
a) Acid rain is caused by emissions of sulfur dioxide and nitrogen oxides reacting with water molecules in the atmosphere.
b) Focus on environmental and ecological impacts for precise scoring.

(e) Mention any two merits of internal sources of recruitment. [2 Marks]

Answer:
1. Economy: Internal recruitment is cheaper as it saves time and money spent on advertising, interviewing, and training new candidates.
2. Motivation: It boosts the morale of existing employees as they see opportunities for career advancement and promotion within the organisation.

Teacher's Note:
a) Internal sources refer to filling vacancies from within the existing workforce through transfers or promotions.
b) Clearly state the advantages in separate bullet points for maximum clarity.

Question 3.
(a) Distinguish between Shut Down Cost and Sunk Cost. [2 Marks]

Answer:

Teacher's Note:
a) Shut down costs continue even when production stops temporarily, whereas sunk costs are past irrevocable expenditures.
b) Present the differences in a tabular format with proper examples.

(b) Why is Dialogue an important element in Public relations ? [2 Marks]

Answer:
1. Two-way communication: Dialogue allows mutual participation, preventing communication from becoming a one-way monologue.
2. Building trust: It helps to reduce prejudice, fosters understanding, and builds up mutual confidence between the organisation and its publics.

Teacher's Note:
a) Dialogue ensures that feedback is received and valued, which is essential for healthy public relations.
b) Keep the points crisp and focused on the psychological and communicative benefits.

(c) State any two features of a Balance Sheet of a company. [2 Marks]

Answer:
1. Statement, not an account: Balance sheet is a financial statement showing assets and liabilities, not an account with a debit and credit side.
2. Prepared on a particular date: It reflects the financial position of an enterprise as on a specific closing date, unlike the Profit and Loss Account which is for a period.

Teacher's Note:
a) The balance sheet proves the accounting equation where Assets equal Liabilities plus Capital.
b) Ensure students state structural features rather than contents.

(d) Explain briefly Employee Relations as a scope of Public Relations. [2 Marks]

Answer:
Employee relations form a vital scope of PR because employees are internal ambassadors of a company. Maintaining cordial relations through sound personnel policies, fair wages, effective communication, and grievance handling helps build a positive corporate image and boosts workforce productivity.

Teacher's Note:
a) Internal public relations focus primarily on creating mutual understanding and goodwill between management and employees.
b) Emphasize that employee satisfaction directly influences external public perception.

(e) Explain current assets with an example. [2 Marks]

Answer:
Current assets are those assets which are expected to be converted into cash or consumed within a short period, generally within one accounting year. No depreciation is charged on them.
For example: Cash in hand, debtors, and closing stock.

Teacher's Note:
a) Current assets represent the working capital of a business enterprise.
b) Definition must include the time frame (one year) and standard business examples.

Question 4.
Justify a reason either for or against each of the following :
(a) Introduction Stage in a Product Life Cycle is not very risky. [2 Marks]

Answer:
The statement is incorrect (against). The introduction stage in a Product Life Cycle is extremely risky because the product is new, consumer awareness is low, sales volume is small, promotional expenses are very high, and there is a high probability of product failure in the market.

Teacher's Note:
a) Students must take a clear stand either for or against and provide strong justification based on product life cycle characteristics.
b) Highlight high initial costs and market uncertainty as reasons for risk.

(b) Accounts should disclose all material information (with reference to the concept of accounting). [2 Marks]

Answer:
The statement is true (for). According to the Full Disclosure Principle, all significant and material economic information relating to the financial affairs of the firm must be fully disclosed in the financial statements so that stakeholders can make informed decisions.

Teacher's Note:
a) Materiality ensures that unimportant details are not overemphasized while crucial financial facts are clearly reported.
b) Reference to the disclosure concept is mandatory for full marks.

(c) Recruitment is a process of elimination. [2 Marks]

Answer:
The statement is incorrect (against). Recruitment is a positive process aimed at searching for and encouraging prospective employees to apply for jobs in the enterprise. Selection, on the other hand, is the process of elimination where unsuitable candidates are rejected.

Teacher's Note:
a) A common student error is confusing recruitment with selection; recruitment invites applications, while selection eliminates unfit candidates.
b) Clearly distinguish between the two HR functions to justify the answer.

(d) Branded goods are normally sold by inspection. [2 Marks]

Answer:
The statement is incorrect (against). Branded goods are not sold by physical inspection of quality or features every time, but are sold by their brand name, trademark, or symbol (e.g., Colgate, Lux) because consumers trust the standardized quality associated with the brand.

Teacher's Note:
a) Branding eliminates the need for inspecting goods repeatedly since standard quality is pre-assured by the manufacturer.
b) Provide examples of branded products to support the justification.

(e) Training reduces employee absenteeism. [2 Marks]

Answer:
The statement is true (for). Effective training boosts employee confidence, job satisfaction, and skill competency. Trained workers feel more secure and interested in their tasks, which naturally leads to lower labour turnover and reduced absenteeism.

Teacher's Note:
a) Job satisfaction derived from proper skill development directly correlates with regular attendance.
b) Validate the statement with positive impacts of training on employee morale.

SECTION – B [60 Marks]
Attempt any four questions from this Section

Question 5.
(a) Modern marketing has created several non-traditional markets. Explain the main types of non-traditional markets. [5 Marks]

Answer:
1. Catalogue Market: Products are displayed in showrooms along with catalogues containing details and prices. Customers select goods after examining samples, often sold at heavy discounts (e.g., home appliances, watches).
2. In-House Market: Door-to-door salespersons visit homes of consumers to offer products directly, preceded by telephonic contact or coupons (e.g., vacuum cleaners, water filters by Eureka Forbes).
3. Mail Order Market: Sellers mail price lists and publicity materials to prospective buyers. Orders are placed through mail and goods are dispatched via V.P.P. or courier.
4. Automatic Vending Machines: Coin or coupon-operated machines installed at public places, schools, or workplaces to sell daily use items like cold drinks, snacks, and milk.
5. Telemarket: Selling products through television demonstrations where customers place orders on toll-free numbers for home delivery (e.g., Asian Sky Shop).

Teacher's Note:
a) Non-traditional markets bypass traditional retail storefronts to offer greater convenience to consumers.
b) Listing at least four to five types with brief explanations and examples is required for a 5-mark question.

(b) Explain the advantages of branding to producers and consumers. [5 Marks]

Answer:
Advantages of Branding to Producers:
1. Product Differentiation: Helps in distinguishing the firm's products from competitors, enabling market control.
2. Facilitates Advertising: Creates brand loyalty and makes promotional campaigns effective.
3. Lower Selling Costs: Reduces dependence on middlemen as branded products enjoy ready acceptance.
Advantages of Consumers:
1. Product Identification: Simplifies shopping and saves time and effort in recognizing preferred items.
2. Protection: Standardized prices are printed on products, protecting consumers from overpricing.
3. Ensures Quality: Guarantees uniform standards of quality and hygienic packaging, preventing adulteration.

Teacher's Note:
a) Divide the answer clearly into two distinct headings - advantages to producers and advantages to consumers.
b) Write at least two to three points under each category to cover the 5 marks comprehensively.

(c) Explain the Maturity stage and Decline stage of a Product Life Cycle. [5 Marks]

Answer:
1. Maturity Stage: During this stage, sales continue to grow but at a decreasing rate until the market reaches saturation. Competition is intense, prices may be reduced due to rivalry, and promotional expenses remain high. Profits start declining as supply exceeds demand. Marketers use strategies like product differentiation, brand image building, and new market development to lengthen this stage.
2. Decline Stage: Characterized by a sharp fall in sales due to the introduction of superior substitute products or changes in consumer preferences. Promotional costs are drastically reduced to minimize losses, and the focus shifts to efficient distribution at the lowest cost until the product is eventually phased out or abandoned.

Teacher's Note:
a) The Product Life Cycle (PLC) tracks a product's sales and profits from introduction to abandonment.
b) Explain both stages with their specific market characteristics and business strategies for full marks.

Question 6.
(a) Explain briefly the various elements of cost. [5 Marks]

Answer:
Cost is broadly classified into three basic elements, each divided into direct and indirect categories:
1. Material Cost: The cost of substances used in production. Direct material becomes an integral part of the finished product (e.g., wood in furniture). Indirect material cannot be directly traced to specific output (e.g., lubricating oil, small tools).
2. Labour Cost: The human effort required to convert materials into finished goods. Direct labour is directly identified with production (e.g., machine operators). Indirect labour performs support tasks incidental to manufacturing (e.g., storekeepers, watchmen).
3. Expenses: All costs incurred other than material and labour. Direct expenses are specific to a particular job or process (e.g., hire charges of special machinery). Indirect expenses, also known as overheads, are general operating costs (e.g., factory rent, lighting, administrative salaries).

Teacher's Note:
a) A clear classification tree of material, labour, and expenses into direct and indirect components is expected in this answer.
b) Use accounting examples for each category to demonstrate conceptual clarity.

(b) Explain:
(i) The Dual Aspect Principle
(ii) The Going Concern Concept [5 Marks]

Answer:
(i) The Dual Aspect Principle: According to this fundamental principle, every business transaction has a double effect on the accounting records. For every debit, there is an equivalent credit. This principle ensures that the accounting equation (Assets = Liabilities + Capital) always balances and forms the foundation of the Double Entry System.
(ii) The Going Concern Concept: It is an assumption that the business enterprise will continue to operate for an indefinitely long period in the future. Because of this concept, a distinction is made between capital expenditure and revenue expenditure, and fixed assets are recorded at historical cost without regard to their fluctuating market resale value.

Teacher's Note:
a) Both concepts are cornerstones of financial accounting principles (GAAP).
b) Sub-part (i) should mention the accounting equation, and sub-part (ii) should explain the treatment of fixed assets and long-term contracts.

(c) Write five differences between Receipts and Payments Account and Income and Expenditure Account. [5 Marks]

Answer:

Teacher's Note:
a) Non-profit organisations prepare these accounts as part of their final accounts.
b) Tabulate the differences across clear operational bases as illustrated in textbooks.

Question 7.
(a) Explain any two functions of the Reserve Bank of India. [5 Marks]

Answer:
1. Monopoly of Note Issue: The Reserve Bank of India (RBI) has the sole monopoly to issue currency notes in the country (except one-rupee notes and coins issued by the Ministry of Finance). To inspire public confidence, it maintains reserves of gold and foreign securities against currency issued.
2. Controller of Credit: RBI regulates the volume of credit created by commercial banks through quantitative and qualitative credit control measures. This is crucial to maintain price stability, control inflation, and ensure economic growth in the country.

Teacher's Note:
a) As the central bank of the nation, RBI acts as the apex financial institution.
b) Students can also mention 'Lender of the Last Resort' or 'Banker to the Government' as valid central banking functions.

(b) Explain ‘Selection Interview’ and ‘Checking References’ as steps in the selection procedure. [5 Marks]

Answer:
1. Selection Interview: A formal face-to-face interaction between the employer and applicant to verify information given in application forms and tests, assess personality, communication skills, and judge overall suitability for the job. Interviews can be structured, unstructured, stress, or group interviews.
2. Checking References: A background verification step where the employer contacts previous employers, educational institutions, or referees cited by the candidate to inquire about their past conduct, character, work ethics, and reliability before making a final job offer.

Teacher's Note:
a) Selection is a hurdle process where candidates are screened at each stage.
b) Detail both steps clearly with their specific objectives in the recruitment cycle.

(c) Explain :
(i) Industrial Advertising
(ii) Concept Advertising [5 Marks]

Answer:
(i) Industrial or Business-to-Business Advertising: Advertisements directed at industrial buyers, business organisations, or intermediaries rather than ultimate consumers. It promotes industrial machinery, raw materials, components, and tools (e.g., printing presses, oil expellers).
(ii) Concept Advertising: Also known as primary demand or pioneering advertising, it is designed to stimulate demand for a completely new product category without emphasizing a specific brand name. It explains the core features and benefits of a new concept to educate the market (e.g., early ads for personal computers or gemstones).

Teacher's Note:
a) Industrial advertising targets business utility, while concept advertising builds primary market demand for novel innovations.
b) Provide distinct explanations and examples for each advertising sub-type.

Question 8.
(a) Write short notes on :
(i) Bhopal Gas Tragedy
(ii) Chernobyl Disaster [5 Marks]

Answer:
(i) Bhopal Gas Tragedy: An industrial disaster that occurred on December 3, 1984, at the Union Carbide pesticide plant in Bhopal, India. Around 45 tons of highly toxic methyl isocyanate (MIC) gas leaked into the atmosphere, causing thousands of immediate deaths and long-term health afflictions, respiratory disorders, and genetic abnormalities among residents.
(ii) Chernobyl Disaster: A catastrophic nuclear accident that occurred on April 26, 1986, at the Chernobyl Nuclear Power Plant in Ukraine (former USSR). A sudden power surge caused a reactor explosion, releasing massive radioactive fallout across Europe, resulting in immediate fatalities, severe radiation sickness, and long-term environmental and health hazards.

Teacher's Note:
a) Both incidents highlight severe industrial and technological failures with catastrophic environmental consequences.
b) Include dates, locations, and primary causes/effects in both short notes.

(b) Describe the role of Sales Promotion and Publicity in promoting a brand. [5 Marks]

Answer:
1. Sales Promotion: Refers to short-term incentives (such as discounts, coupons, free samples, contests, and bonus offers) designed to encourage customers to make an immediate purchase. It boosts short-term sales volume, clears accumulated stock, and supports advertising efforts.
2. Publicity: A non-paid form of non-personal communication through mass media news stories or editorial comments regarding a company or its products. Favourable publicity builds a strong corporate image and high credibility because the message comes from an independent, trusted source rather than paid advertisements.

Teacher's Note:
a) Sales promotion provides immediate buying incentives, whereas publicity enhances brand credibility through independent media coverage.
b) Clearly distinguish how each tool contributes to the overall brand promotion mix.

(c) Explain Persuasion as an element of Public relations and mention any two principles of persuasion. [5 Marks]

Answer:
Persuasion is the process of convincing individuals or groups to accept an idea, product, or institution voluntarily through communication rather than force. In public relations, persuasion is vital for shaping positive public attitudes and building goodwill.
Two Principles of Persuasion:
1. Acceptance of the message is critical: For attitudes to change, suggestions for change must first be received, understood, and accepted by the audience.
2. Conformity with needs: A suggestion is more likely to be accepted if it aligns with the existing needs, desires, group norms, and loyalties of the audience.

Teacher's Note:
a) Persuasion relies on psychological appeal and mutual trust rather than authoritative compulsion.
b) State the definition clearly followed by two valid principles from the syllabus.

Question 9.
Case Study
Patanjali Ayurved Ltd. (PAL) is an FMCG company established in 2006 by Acharya Balkrishna and Baba Ramdev. It is located in the industrial region of Haridwar. It was started with the objective of promoting the ancient science of Ayurveda in coordination with the latest technology. It manufactures mineral and herbal products and offer healthcare solutions. They started as a small company, but their revenue kept growing from 163 crores in 2009-10 to 5000 crores in 2015-16 and they are targeting for 10000 crores in 2016-17.
They manufacture products using Ayurveda and natural components. Their products are cheaper than alternatives in the market due to low production and marketing costs. They have over 4700 retail outlets and do a lot of online selling. They are also planning to open outlets at railway stations and airports. They are now tying up with various other retail chain stores like Future group retails, Modern trade stores, Reliance retail, Hypercity and Star Bazaar.
With reference to the above :
(a) Name and discuss the pricing strategy used Patanjali Ayurved Ltd. (PAL). Why has this strategy been successful ? [5 Marks]

Answer:
Patanjali Ayurved Ltd. used the Penetration Pricing Strategy. In this strategy, a firm sets a relatively low price for its products during the initial introduction stage to capture a large market share quickly and make the brand popular. This strategy has been successful because low prices attract cost-conscious consumers, drive high sales volume, quickly establish brand presence in a competitive FMCG market, and create immediate customer attention.

Teacher's Note:
a) Penetration pricing helps new market entrants gain rapid traction against established competitors.
b) Ensure both the name of the strategy and the reason for its success are explicitly addressed.

(b) PAL’s target is to double their sales in the current financial year. How do they plan to achieve this ? [5 Marks]

Answer:
Based on the case study, PAL plans to achieve its sales target through the following expansion strategies:
1. Leveraging low production and marketing costs to offer affordable Ayurvedic and natural products.
2. Expanding their retail footprint through over 4,700 retail outlets and planned new stores at railway stations and airports.
3. Strengthening distribution channels by tying up with major retail chain stores such as Future Group Retail, Modern Trade Stores, Reliance Retail, Hypercity, and Star Bazaar.
4. Engaging heavily in online selling to capture digital consumers.

Teacher's Note:
a) Case-based questions require students to extract specific factual points directly from the provided passage.
b) Bullet points outlining distribution partnerships and retail reach secure full credit.

(c) PAL has not been using sales promotion techniques to increase their sales. Discuss any five such techniques that you feel would help the company to achieve its sales target. [5 Marks]

Answer:
1. Distribution of Samples: Distributing free sample packs of herbal products like toothpaste or soaps so consumers can try them before buying.
2. Money-off Coupons: Issuing discount certificates that allow customers to purchase products at a specified price reduction.
3. Premium or Bonus Offer: Offering a complementary item free of cost on the purchase of a specified quantity (e.g., one soap free with two).
4. Contests and Competitions: Organising promotional contests for consumers or retailers with attractive prizes to stimulate enthusiasm.
5. Money Refund Offer: Refunding a part of the purchase price upon presentation of proof of purchase, such as a cash memo or product wrapper.

Teacher's Note:
a) Sales promotion techniques provide temporary incentives to boost immediate purchase volumes.
b) List and explain five distinct sales promotion tools with relevant examples.

Question 10.
Mr. Raj is a newly appointed Human Resource Manager of the Hyderabad branch of a foreign bank. The bank is looking for a rapid expansion of its business in the Southern region. So it wants to recruit, select new employees and launch various schemes and offers. Being an organisation of repute, it is highly essential to select efficient people who will be able to contribute effectively to the growth of the business. The entire responsibility of developing a good work force for business expansion in the region is entrusted to Mr. Raj.
With reference to the above :
(a) Name the key function of Human Resource Management which Mr. Raj is expected to perform. Mention the key activities under this function. [5 Marks]

Answer:
The key function of Human Resource Management which Mr. Raj is expected to perform is the **Procurement Function** (or Employment Function).
Key activities performed under this function include:
1. Job Analysis: Studying jobs in detail to prepare job descriptions and job specifications.
2. Human Resource Planning: Estimating present and future manpower requirements of the organisation.
3. Recruitment: Searching for prospective candidates and encouraging them to apply for jobs.
4. Selection: Screening and judging candidates to choose the most suitable applicants.
5. Placement: Assigning suitable jobs to selected candidates matching their qualifications.

Teacher's Note:
a) Procurement deals with acquiring the right number and quality of personnel for the enterprise.
b) Identify the function correctly and list the procedural sub-activities for complete marks.

(b) Describe any two roles of Human Resource Management. [5 Marks]

Answer:
1. Significance for an Enterprise: HRM helps an enterprise achieve its goals efficiently by attracting and retaining top talent through proper recruitment and selection, developing employee skills through training and performance appraisal, securing willing cooperation through motivation, and ensuring optimal utilisation of human resources.
2. Professional Significance: Effective HRM improves the quality of work life, fosters teamwork and healthy interpersonal relationships among employees, and provides maximum opportunities for individual personal development and career growth.

Teacher's Note:
a) HRM plays multi-dimensional roles spanning enterprise-level objectives and professional development.
b) Explain two broad levels/roles comprehensively as prescribed in the curriculum.

(c) Briefly explain any five tests required for selecting employees. [5 Marks]

Answer:
1. Intelligence Tests: Used to measure a candidate's capacity for reasoning, memory, vocabulary, mental alertness, and comprehension.
2. Aptitude Tests: Measure a candidate's potential ability and capacity to learn new skills required for a specific job.
3. Trade Tests (Performance Tests): Measure the applicant's existing level of knowledge and skill already achieved in a particular trade or occupation (e.g., typing speed test).
4. Interest Tests: Employed to discover a candidate's preferences and areas of vocational interest for specific types of work.
5. Personality Tests: Designed to evaluate emotional balance, maturity, temperament, and interpersonal traits of the candidate.

Teacher's Note:
a) Selection tests provide objective supplementary data to judge candidate suitability beyond interviews.
b) List and define five distinct selection tests clearly to secure full marks.